Even though I’m finding it difficult to buy US stocks with the S&P 500 reaching all-times daily, and the CAD/USD exchange rate making every company south of the border look even more expensive, I pulled the trigger today and added to my position in Pfizer. Even after Pfizer’s proposed acquisition of AstraZeneca (“AZ”) was rejected by AZ’s board, I still find a lot to like about Pfizer:
- A dividend yield of 3.55% that is sustainable given their 30% payout ratio.
- A solid record of dividend growth over the last five years (averaging 13% per year) and in the last year (8.3%).
- A reasonable valuation with a P/E of 17.9X
- A strong portfolio of drugs still on patent and a promising pipeline of new drugs
- Great geographical diversification with only 39% of sales in the US, 22% in emerging markets
- Strong balance sheet reflected in credit ratings of AA/Stable and A1/Stable
Adding to my position in Pfizer is in-line with my 2014 goals of increasing amounts invested in companies I’m comfortable with and puts me temptingly close to achieving my forward dividend goal for the next twelve months. Since the forward dividend goal was to be accomplished by the end of the year, I’ll have to revise it if I have it met by next Monday.
(Full disclosure: Long Pfizer)