How Concerned Should Income Investors Be About Pfizer's Dividend?
Pfizer has a huge 6% yield and a payout ratio well over 100%, yet the company is still maintaining the dividend.
Overview
Pfizer (NYSE: PFE) is not hitting on all cylinders today. That's why the stock is down more than 50% from its 2021 high, as of this writing, and its payout ratio is well north of 100%. Dividend investors may find the huge 6% yield attractive, but before buying, you have to ask if that dividend is actually sustainable. The answer is likely yes, here's why.
The financial impact of dividends shows up on the cash flow statement, not the earnings statement. This is important to understand as you look at the payout ratio, which compares dividends to earnings. It is definitely a good thing if earnings cover the dividend, which Pfizer's earnings do not right now, but it isn't necessary for this to be the case for a company to continue supporting its dividends.
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Originally published at www.fool.com.