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

Core Viewpoint - Pfizer offers a high dividend yield of 7%, but Merck's lower yield of 3.7% may be more attractive for conservative dividend investors due to its lower payout ratio and financial stability [2][5][12] Company Overview - Merck has a market cap of $210 billion, while Pfizer's market cap is $135 billion, positioning both as significant players in the pharmaceutical industry [2] - Both companies face challenges related to high research and development costs and the complexities of drug approval processes [3] Financial Metrics - Merck's current dividend payout ratio is approximately 40%, whereas Pfizer's payout ratio exceeds 100%, indicating a riskier dividend situation for Pfizer [5][12] - Merck's debt-to-EBITDA ratio is lower than Pfizer's, providing Merck with greater financial flexibility [12] Acquisition Strategies - Pfizer's recent acquisition of Metsera involved an initial cash payment of $65.60 per share, highlighting its aggressive strategy to enhance its drug pipeline [7][9] - The acquisition is seen as critical for Pfizer, but it raises concerns about the sustainability of its dividend given the high payout ratio and potential for a dividend cut [10][13] Market Position and Future Outlook - Both companies are expected to survive current challenges, but Merck's lower yield and more conservative financial management make it a potentially safer choice for income-focused investors [13]