The Most Concerning Thing About Pfizer's Dividend Isn't What You Think
Pfizer's payout ratio is above 100%, but that's not the number you should probably be watching right now.
Overview
Pfizer (NYSE: PFE) has an attractive 6.1% dividend yield, as of this writing. That compares with roughly a 1% yield for the S&P 500 index (SNPINDEX: ^GSPC) and a 1.4% yield for the average pharmaceutical stock. Investors should probably be worried about Pfizer's shockingly high yield. But you may not be looking at the right metric to gauge how worried you should be.
Most investors look at the dividend payout ratio when they consider dividend safety. This metric compares dividends to earnings, which is a logical concept. If a company earns more than it pays in dividends, the dividend should be safe. Pfizer's dividend payout ratio is currently above 200%, which is not comforting.
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Originally published at www.fool.com.