Prediction: This Is Where Pfizer Stock Will Be in 2030
Pfizer is facing material patent expirations over the next two years, but that will be over by 2030.
Overview
Pfizer (NYSE: PFE) has an attractive 6.4% dividend yield. That compares to 1% for the S&P 500 index (SNPINDEX: ^GSPC) and 1.4% for the average pharmaceutical stock. Despite the outsize yield, the company is sticking by the dividend payment. That's great, but why is the yield so high? An examination of the business through 2030 will explain the problem.
From a big picture perspective, Pfizer sells pharmaceuticals. Only the drugs it sells don't appear out of thin air. It has to develop them or buy them before it can market them. That's an expensive, often time-consuming, and difficult process. This is why drug companies are afforded a limited, patent-protected window of exclusivity to sell their drugs. Drug companies like Pfizer can generate substantial revenue from patent-protected drugs.
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Originally published at www.fool.com.