Billionaire_Bunny: Why I'm Buying More of Pfizer Inc. Stocks

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Tuesday, February 16, 2021

Why I'm Buying More of Pfizer Inc. Stocks

My last article on Pfizer Inc. (Ticker: PFE) was back in October 2020, titled "Why Pfizer Stock is a Great Buy Now." I have Pfizer Inc. stocks in my portfolio, and it is one of my largest positions. My average purchase cost in Pfizer Inc. is about $35.25, and I own 3,975 shares of this stock, making it 14.28% weighted from my overall portfolio.

If you are not familiar with Pfizer Inc., the company develops, manufactures, and sells healthcare products worldwide. The company is responsible for the vaccine for the Covid-19 virus. The company's stock price has fallen by 7%, from the $37-38 range to the current $34.72 close on February 13, 2021. I am thrilled when I see a company I like to go down in value. This allows me to purchase more shares of the company at a discount price. This article will explain why I am purchasing more Pfizer Inc. (Ticker: PFE) stocks into my portfolio. Moreover, I believe the fallen price is an excellent opportunity for me to get a great bargain for shares of the company.   


Great & Safe Dividend Yield.

Pfizer Inc. (Ticker: PFE) is currently yielding a dividend yield of 4.50%. This dividend rate is quite compelling for dividend investors like me. The dividend yield appears to be very safe since the dividend payout ratio is 46.42%, which is considered very low. A low payout ratio shows that the company can pay its dividends to the investor and maybe increase it towards the future. At the current P/E ratio of 12.85, investors are buying at an effective yield of 7.8%, and the dividend yield takes 4.5% percentage points of that yield. A well-covered dividend yield of 4.5% plus 3% EPS growth adds up to 7 to 8% total return, provided the P/E ratio remains at the current level. Also, the current P/E ratio is below historic levels. This provides upside potential for total return. Pfizer Inc. provides a great addition to my dividend-paying portfolio.


Looking for Great Value in Market Mispricing of Stocks.

Pfizer Inc. (Ticker: PFE) is responsible for the upcoming Covid-19 vaccine, which is excellent news for the company. Pfizer Inc. has been much in the news as the firm announced and then started distributing its Covid-19 vaccine.

 

The stock price has declined, and the stock price's mispricing is an excellent indicator for me to invest in this company. It seems Mr. Market has such a modest valuation on a company that should be very attractive in market conditions. I am always looking for great value when investing in the stock market and believe Pfizer Inc. is a stock that comes to my radar.

 

I am confident that even without the Covid-19 vaccine; Pfizer Inc. is still a great company that generates solid free cash flow. The trailing P/E is only 28.08, and the forward P/E is extremely low at 13.36. Moreover, the company is very profitable; generating a return on equity of 10.88%, and the profit margin is fantastic at 79.54%. The other company in the news for a competitor vaccine, AstraZeneca (Ticker: AZN), is trading at 66 times, Merck's (Ticker: MRK) normalized P/E is 18x, and Denmark's Novo Nordisk (Ticker: NVO) trades at 23 times.

 

Pfizer Inc.'s stock price is not priced correctly and can be a potential investment for investors looking for value and dividend payment to their portfolio. The company's current valuation is the lowest compared to its competitors.



Bottom Line

Pfizer Inc. (Ticker: PFE) is looking more attractive now than at any other time in the past few years, with a new, growing, and balanced drugs portfolio, reasonable financial flexibility, high dividend yield, and with the cherry on the cake of the Covid-19 vaccine.

 

Pfizer Inc. (Ticker: PFE) stock is my top holding in my dividend growth portfolio. The decline in the stock price does not affect my view of this company. I like it when a company I like goes down in price. This allows me to add more positions of the company into my portfolio. I will buy more shares of Pfizer Inc. (Ticker: PFE) with the $2,000 monthly contribution and dividend income I am going to receive. I hope the stock price continues to decline further to buy more shares of this company at a bargain.

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