Pfizer Just Confirmed It's a Dividend Investor's Dream Stock

Pfizer (NYSE: PFE) has been a nightmare for many investors in recent years. At one point earlier this year, the big pharma stock was nearly 60% below its peak set in late 2021.

However, the narrative for Pfizer appears to be changing. Its shares are up a respectable 9% year to date. The company reported better-than-expected second-quarter results on Tuesday. I think this Q2 update is much more important than only the headline numbers. Here's how Pfizer just confirmed it's a dividend investor's dream stock.

1. A juicy dividend that management supports

Anyone who has followed Pfizer lately knows it offers a high forward dividend yield of over 5.3%. The drugmaker has increased its dividend for 15 consecutive years. Income investors should love that Pfizer's management appears to solidly support keeping that streak going.

It didn't take long into Pfizer's Q2 earnings conference call for CEO Albert Bourla to mention the dividend program. Bourla stressed, "I want to reinforce our commitment to maintaining and growing our dividend over time."

CFO David Denton brought up the dividend only seconds into his remarks in the Q2 call. When he later discussed Pfizer's capital allocation strategy, the first thing on the list echoed Bourla's words about maintaining and growing the dividend. Denton also noted that Pfizer "returned $4.8 billion to shareholders" with its dividend in the first half of 2024.

2. Poised for an improving bottom line

Of course, management support for a dividend doesn't mean much if a company can't afford to continue paying dividends at current levels. The good news on this front, though, is that Pfizer is poised to improve its bottom line and make its dividend even safer.

Sure, the big pharma company's earnings fell 11% year over year in Q2. However, revenue grew for the first time since the fourth quarter of 2022 at the peak of its COVID-19 sales. Importantly, Pfizer raised its full-year adjusted earnings guidance to reflect year-over-year growth of nearly 39% at the midpoint of the range.

Bourla said in the Q2 call that Pfizer expects to deliver at least $4 billion in savings from its cost realignment program by year-end. He added that this program should put the company "on strong footing toward margin expansion and improved financial returns." That's music to dividend investors' ears.

3. More growth potentially ahead

Dividend investors primarily want high levels of income that they can count on. However, they don't mind getting growth in their investments too. Pfizer appears to be in a good position to deliver growth.

Investors should be pleased that Pfizer's acquisitions are reaping great rewards. Sales for migraine drug Nurtec, which Pfizer picked up with its purchase of Biohaven, soared 44% year over year in Q2 to $356 million. Cancer drug Adcetris, which Pfizer gained with its acquisition of Seagen, generated sales of $279 million in its first quarter in Pfizer's lineup.

Pfizer's pipeline continues to deliver as well. The company won 10 regulatory approvals in the U.S. and European Union in the first half of 2024. It also reported five positive phase 3 readouts, notably including two for respiratory syncytial virus (RSV) vaccine Abrysvo.

And there's potentially more good news. Eli Lilly and Novo Nordisk have ranked as the hottest big pharma stocks around over the last couple of years because of their obesity drugs. Pfizer could join the club in the future.

A few weeks ago, the company announced that it plans to advance a once-daily dose of oral obesity drug danuglipron into late-stage testing. Bourla said in the Q2 call that the tolerability for the once-daily formulation "are competitive for the class" -- encouraging news following the disappointing safety profile for the twice-daily dosage of the drug.

A dividend investor's dream stock

Granted, Pfizer faces some risks. Several of the company's top products lose patent protection over the next few years. There's no guarantee that Pfizer's pipeline programs will pan out. Newly launched products might not achieve the level of commercial success the company expects.

However, Pfizer's dividend looks solid and safe. The big drugmaker appears to have a good strategy in place to return to consistent growth. Is Pfizer really a dividend investor's dream stock? I think so.

Keith Speights has positions in Pfizer. The Motley Fool has positions in and recommends Pfizer. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy .