Lanny’s Recent Stock Purchase – Pfizer (PFE)

Third purchase in 31 days?  Now that’s what I’m talking about.  I’m starting to feel like the Lanny of old again, if only the grey hair can revert back to black, I’d appreciate it.  January finished off with some tail winds, as big final year earning releases are coming out, Trumps making his speeches and movements, as well as your everyday volatility that January typically brings.  As dividend investors, we need to sit tight and buy when we find the right value at hopefully the right times if you can.  This purchase signifies that, based on my analysis.  Let’s find out why I purchase Pfizer (PFE)!

Pfizer (PFE) Stock Purchase

Cannot believe I bought Pfizer (PFE)…  What many of you may not know is that Pfizer was the first individual stock that I really purchased back in my early days, I believe this one was a 2010 purchase, if I’m not mistaken, back when it was trading in the low-to-mid $14’s.  Well, times have changed, their dividend has grown every year since then and the “blue” pilled company has been very strong as of late.  Pfizer has $195B in market capitalization, released their earnings that shared 11% revenue growth, with 9% diluted EPS growth, as well – not too fricken bad.  What does that mean for dividend investors?  It means they are performing better than in the past, which allows room to continue to pay the dividend, as well as increase it!

1.) Though they were not on my 2017 Stocks to Look forward to.  I wanted to build this position up from an investment basis that started such a long time ago, as they produced only around $85 in forward income for me.  I know that may sound like quite a bit, but I wanted a more round/robust position in Pfizer, but never could think of the right time.  Well – I picked them up 1 day before their ex-dividend date, talk about timing.  Further their product brands in Viagra, Lipitor, Advil, Chapstick, Centrum, Robitussin, Thermacare, I feel like I can go on.. just like PG & JNJ, love keeping it simple here.

2.) They are back on a streak of 6, going on 7 years of dividend growth, which they’ve been similar to Johnson & Johnson (JNJ), in that they always seem to increase by around that 7% mark.

3.) At roughly a forward looking $2.55 based on their earnings release guidance, the purchase price at $31.4862, shows a forward Price to Earnings (P/E) ratio of 12.35.  Not too bad at all, and definitely fits within the Dividend Diplomat Stock Screener

4.) Additionally, their payout ratio, based on $1.28, is smack dab in the middle!  50% going forward is incredible and leaves plenty of room for further growth.  I would also like to point out the yield of 4.065%; which is greater than their 5 year yield average by approximately 60-65 basis points, showing further signs of undervaluation.

5.) Similarly, this is falls in line and is part of my upcoming strategy post will come soon, very boiler plate and easy, but still want to show how I’m making this a bit “easier” this year!

See my trade screen shot below: 

I purchased $800 worth at $31.4862 per share for a total of 25.2825 shares.  This alone adds $32.36 to my forward dividend income and is enough to add a whole share during the year in reinvestment.  This now increases my position to over 90 shares of this pharmaceutical beast!

Pfizer Stock purchase summary & Conclusion

My position now sits at ~91.59 shares of Pfizer in my portfolio and is now producing me forward income of $117.24 or $29.31 per quarter or almost a full share per quarter now.  I’m very lucky to have had some cash available and am able to knock away at the investment goals I have established.  I am definitely excited for March now, given this bad boys comes early in the month, i.e. on the 1st day.  A little busy season present, right?  Kidding, kidding… on that note, on my watch I am less than 50 days from this being over.  Thank God, is all I have to say.  Sorry to digress…  Overall, excited with this purchase and continues my path to accomplish my goals set for 2017.

What do you guys think?  Like healthcare of pharmaceuticals at the moment?  Making any moves with the rollercoaster market?  How does everyone feel?  Anyone buy Pfizer towards the end?  Hope all has been well and you’ve maintained your health, stayed safe from the winter storms and kept warm.  Talk soon and thank you so much for stopping by!

-Lanny

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18 thoughts on “Lanny’s Recent Stock Purchase – Pfizer (PFE)

  1. Right there with you I picked up 35 shares of PFE for my first position in the stock this month when it was in the 30s, can’t wait to start dripping it! I also got it in my Roth as I am just maxed out 2016 and am now focusing on 2017. They have an amazing drug pipeline that will keep this beast moving along.

    • Stef –

      Thanks for the post and dayum 35 shares is massive for this to get it going, nice work! Hell yeah for maxing it out, as well, serious tax savings there, keep that fueled up my man. Also – the DRIP will be great for you + the consistent increases they’ve had and the stronghold of brands in their repertoire is awesome. Keep it up.

      -Lanny

  2. Nice trade. I’m also itching to add to my existing Pfizer position at these prices.
    Going to be interesting to see what impact a reduction in US corporation taxes does for Pfizer’s dividend and buyback programs. It’ll be a while in coming, but at least we’re getting paid well to wait (c. 4% yield).

    Best,

    • Neal –

      Got that itch eh? Scratch it! Joking, I played it so that I grabbed them before the ex-dividend date. I agree on the tax impact – however, I plan on no impact and if it does happen, then hell yeah. 4%+ yield is GREAT in this environment, always.

      -Lanny

    • MDP –

      Oh I know you’ve got a sh*t ton, and you grabbed them at a great price. Keep an eye on them if they dip back into the $30’s or upper $20s ($28-$29). Just great. Thanks again MDP, talk soon.

      -Lanny

    • 5-0

      Thanks for the post, as always. It is a great yielding company and it’s wild knowing that I purchased them so long ago and now, years and years later, buying them again. Nice work on your recent purchases, I own Mattel (been tough lately) and quite a few peers own Verizon. Keep staying consistent there.

      -Lanny

  3. How do you view their ability to cover dividends in the future with an increase in the prominence of generics along with a dramatic drop in new blockbuster drugs?

  4. Nice job Lanny. I’ve been watching PFE for a while but I haven’t bought any shares yet. Not sure why though. I like the long-term prospects for this pharma giant.

    • IH –

      Thanks for the comment! The metrics fit very well in the diplomat screener, the yield was ripe and it’s hilarious how where I started, I am back to the same stock! It’s great. Nice job over there though, your 2017 is kicking butt.

      -Lanny

  5. I’ve had PFE on my list for a while now but haven’t pulled the trigger. They’ve certainly been acquisitive in the past few years and hopefully that gets the earnings going. They’ve got a good bit of runway on the dividend as well so they can probably keep that growing for a while.

  6. This has been on my list for the past year but there are several problems with it and why I haven’t pulled the trigger:

    Negative Sales Growth
    2010 Revenue of $67B reduced to $52B in 2016

    Questionable payout ratio
    2016 GAAP EPS = $1.17 with a $1.22 paid dividend
    Yes, the adjusted EPS is $1.88 but man, I like the GAAP numbers

    Cash coverage
    This is the good part of the story: $13B in CFC and $7B paid in dividends with $72B in retained earnings.

    Political risk
    With Trump, I’ve done well in MLPs and oil companies. Medical has been subpar. Maybe if it’s under 30 (where it was in November) that would be interesting.

    I love earnings season because you can get a nice discount on temporary price drops. In the last week I picked up:

    AFL, dividend aristocract, should benefit from rate hikes
    D – slowly building out my utility holdings
    UPS – I’m not worried about Amazon too much

    I’m looking at your favorite: CZNC, just want it to get a little cheaper.

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