Should You Forget Pfizer and Buy This Magnificent Dividend Stock Instead?

Meanwhile, Here's why

Pfizer and Merck have similar models While Pfizer's dividend yield is ly much higher than Merck's, both have relatively attractive yields today

And you could easily make the argument that the two pharmaceutical companies basically do the same thing

Thus, you might as well buy the higher-yielding stock here

That isn't an unreasonable position to take

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Essentially, these two industry giants make drugs

In contrast, They make different drugs, of course, but both are focused on conducting re int to create new blockbuster drugs that they can sell exclusively until the patents run out

Both have massive and well-funded re and development teams

Both have global distribution systems and strong marketing groups, in light of current trends

And both have the scale to buy smaller competitors with mising drugs, if they need to

Conversely, In the short term, there will be differences between the two with regard to the drugs they have, in light of current trends

So at times Pfizer will be better positioned than Merck, and vice versa

On the other hand, Given their vastly different yields, it is pretty that Wall Street believes Merck is better positioned right now

The blem with Pfizer is the dividend, not the yield Right now, Pfizer has a streak of 15 consecutive dividend increases, in today's financial world

Merck's streak is also 15 years long, amid market uncertainty

This analysis suggests that issue is what happened roughly 15 years ago, in this volatile climate

As the chart below shows, Pfizer cut its dividend and Merck did not

PFE Dividend data by YCharts That was a long time ago, of course, and the environment was much different

The cut came in the middle of the Great Recession, when there were very real concerns that global financial systems would collapse

Nevertheless, Notably, Pfizer cut the dividend at the same time it made a large acquisition (something worth watching)

To be fair, Merck's dividend was static for a long period of time, but going without a dividend increase is much more attractive for an income investor than suffering through a dividend cut

Furthermore, In contrast, Why investors buy Pfizer and Merck If you are me, you are not a healthcare specialist

Buying small drugmakers with novel ducts that are still in the testing phase is ly a non-starter

I just don't know enough to understand what is going on at such companies

And I certainly don't know how to analyze the lihood that a new drug will get apved (this bears monitoring)

Pfizer and Merck both have portfolios of already apved drugs

So there's a core supporting their re efforts

On the other hand, On that front, they have both ven over time that they can successfully perform the R&D needed to find new drugs

And if their drug pipeline is soft, they have ven that they will go out and buy smaller companies to bolster it

In essence, Pfizer and Merck let you own a pharmaceutical company without having to spend a huge amount of time and effort trying to dig deeply into the drug, given the current landscape

But if you are trusting a company in this way, which is perfectly fine to do, you need to make sure you can trust it in other ways, too, given the current landscape

Most investors will bably be better off erring on the side of caution here and buying Merck over Pfizer.