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Pfizer's Dividend Yield Is 7.5%. Is It Still Safe?
When a stock yields more than 5%, investors start to become skeptical about whether the payout is indeed safe. While it's tempting to want to believe that it can be safe and that it can be an excellent source of future dividend income, you also don't want to get burned and see that dividend get cut or suspended.Consider pharmaceutical giant Pfizer (NYSE: PFE). Its dividend yield is around 7.5% right now, and if the stock continues to decline, it may not be long before it hits 8%. The big question is whether this is really a steal of a deal and a good buy, or if Pfizer may soon have to reduce its dividend?A good starting point for investors in analyzing a dividend stock is to look at its payout ratio. This considers the company's dividend with respect to its earnings per share (EPS). The higher that EPS is in relation to the dividend per share, the lower the payout ratio, and the more sustainable the dividend is.Continue reading
When a stock yields more than 5%, investors start to become skeptical about whether the payout is indeed safe. While it's tempting to want to believe that it can be safe and that it can be an excellent source of future dividend income, you also don't want to get burned and see that dividend get cut or suspended.
Consider pharmaceutical giant Pfizer (NYSE: PFE). Its dividend yield is around 7.5% right now, and if the stock continues to decline, it may not be long before it hits 8%. The big question is whether this is really a steal of a deal and a good buy, or if Pfizer may soon have to reduce its dividend?
A good starting point for investors in analyzing a dividend stock is to look at its payout ratio. This considers the company's dividend with respect to its earnings per share (EPS). The higher that EPS is in relation to the dividend per share, the lower the payout ratio, and the more sustainable the dividend is.
