Monday, December 12, 2005

Pfizer Showing The Money

With Pfizer (PFE) touching 8 year lows today, the company announced a huge dividend increase. They are increasing the dividend 26% to $0.24 per share from $0.19. This will increase the yield to ~ 4.5%, which isn't bad. This is definitely a good move by Pfizer to enhance shareholder value. With an aggressive stock buyback and a high dividend, I really can't see the stock falling any further. I'm going to stick my neck out and say that Pfizer has hit a bottom. The stock had a strong reversal from the lows after the dividend announcement. Management did the right thing by showing the money to the shareholders!


At December 14, 2005, Blogger Mathieu said...

I don't know if drug company should pay dividends.
Maybe the money would be better spent in R&D.

Even if they want to please investors, a buyback could be better.

I have a feeling that dividends show the world that you've become a huge cash cow without a real striving for innovation any more.

PS: By the way I bought that book you recommended me - by O'Neil - it's absolutely great. Thank you

At December 14, 2005, Blogger Money Turtle said...

Pfizer is already spending a good chunk of money on R&D. They also have a big stock repurchase plan in progress. A big dividend increase just makes a strong statement that not everything is doom and gloom. A mature growth company like Pfizer is valued based on its dividend payout.

Make sure you get a copy of the IBD newspaper.


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