Top Three Picks for January 2021 (Pfizer)

Pfizer has always been a conservative investor's choice for his or her portfolio because of its consistent dividend pay. Who doesn't want a quarterly pay from your investment?

Image A: Pfizer's Dividend History

Image A shows the company's dividend history since 2017. A range between $0.32 - $0.39 per share quarterly pay at a price of $34.90 per share. Before we delve further, I just want to talk about Pfizer's history in the last 5 years before we go into as to why I believe the stock is positioned to have solid growth in the next five years or so.

For the last 5 years, Pfizer wasn't able to beat the broad-market index except in 2018. As an investor, I will be worried if I base historic returns to predict future performance of this big drugmaker. However, the tables have turned. There are better days ahead!

With Covid-19 continuously wrecking havoc globally, Pfizer in partnership with BioNTech received regulatory approval from the U.S. government to use its Comirnaty Covid-19 vaccine. The vaccine sales should generate around $15 billion solely on its then-current supply agreements. It seems likely that there will be more big supply deals to come not just from the U.S. but in other countries as well especially that last week, the results from two studies were announce which bode well for Comirnaty.

On February 8, Israeli researchers posted two separate studies online which show the same finding that the Pfizer's vaccine seems to reduce the spread of Covid-19 aside from preventing infection among people who have received the vaccine already. Not only this, another research team from University Oxford found that vaccinated individuals who have received two doses have strong T-cell responses against the new variants (U.K. and South African). This is a promising finding! The studies published online are yet to receive peer-review however if these findings are confirmed then this translates Financial benefits to the drugmaker.

Moreover, the next question is how long will Comirnaty protect the individual from Covid-19? This is critical because there is a higher chance that booster shots will be required. This will imply continuous revenue for Pfizer.

What are the PROS?

Pfizer's Comirnaty vaccine is well-positioned to generate higher total returns in the coming years. Aside from that, Pfizer's drugs Eliquis and Vyndagel will continue to deliver solid sales growth. Also, with Pfizer's company's reconstruction through Viatris company, it expects to deliver risk-adjusted revenue growth of at least 6% annually over the next several years which is on top of the Comirnaty Covid-19 vaccine.

What are the CONS?

Based on the slump performance of the drugmaker's history performance, I will be mildly cautious. Furthermore, there are other Covid-19 vaccines given regulatory approval aside from Pfizer. Other than that, there is an on-going delivery issues by Pfizer which is falling below expected delivery plans. This is a question as to how they will address this logistics problems to be able to supply the growing demand in order to achieve the projected sales.

What I think?

According to CNN Business, the current consensus among the 21 polled investment analysts is to HOLD stock. According to their 12-month price forecast, the median target is $40 (with a high estimate of $53 and low estimate of $36). It is currently priced at $34.90 which is totally a bargain at the moment given that it has an attractive dividend pay!

My Progress...

I bought PFE months ago before it received approval from regulatory bodies. I want to invest more because aside from the on-going progress with its Covid-19 vaccine, I am more attracted to the dividend pay.

Image B: My Dividend Pay Table Calculation

My currently lifestyle will cost me around $24942.60 (£18,000) annually. If we see Image B, you can have an idea as to how important a dividend pay is when choosing the stocks that you want to include in your portfolio. A 700 shares of Pfizer will deduct a thousand dollars off my annual lifestyle cost. This means that I do not have to work more to generate $1,000+ because basically I am letting ''money work for me''. That's the beauty of dividends!

I hope I have shared something insightful. To more progress towards financial freedom! Next topics will be about ETF, U.K. brokerage accounts, Amazon Affiliate program, and Canva editor.