Analyzing High-Dividend Stocks: Merck vs. Pfizer

Investors should consider high-yield stocks like Merck and Pfizer. Merck offers a 3.7% yield but faces challenges with Keytruda's patent loss. Pfizer presents a more favorable outlook with a 6.7% yield and consistent dividend payments.

Date: 10-02-2025

AI Rating: 6

Earnings Per Share (EPS): Pfizer expects adjusted earnings between $2.80 and $3.00 per share for the current year, which is sufficient to meet its dividend commitment of $1.72 per share. This positive expectation adds confidence for investors seeking stable income.

Dividend Trends: Pfizer has increased its payout for 16 consecutive years, suggesting a solid track record of maintaining and growing dividends despite operational challenges. This could be appealing to dividend-focused investors.

Revenue Considerations: Merck's revenue stream heavily relies on Keytruda, which, while still generating significant sales of $31.3 billion annually, is expected to face challenges once patent protections expire. The potential loss of half its sales shortly after these patent losses could negatively impact earnings.

Pfizer, on the other hand, faces upcoming patent cliffs but has several new treatments like Padcev that are positioned to drive future revenue growth. The recent approval and sales of Padcev could enhance Pfizer's revenue stability as it approaches the loss of exclusivity for Eliquis in 2028.

Market Position: While both companies are facing headwinds with their leading drugs, Pfizer seems better positioned to manage these changes. The anticipated sales from Padcev and other new treatments could fill gaps left by declining revenue streams from older products.

Investor Confidence: Overall, Pfizer’s strong dividend history, favorability in expected EPS, and a more diversified revenue stream make it a potentially safer investment choice compared to Merck. Investors should closely monitor developments regarding drug approvals and sales forecasts for both companies moving forward.

Stocks: MRK PFE