    Most of my investment portfolio is well diversified in low-cost mutual funds, but I do invest in individual stocks. One of my recent purchases is Pfizer (PFE), the “world’s largest research-based pharmaceutical company.” It’s one of the most widely owned stocks in the market, yet has been a laggard for several years in terms of stock price appreciation. Well, depreciation is more like it… but although the stock price has not rewarded investors over time, the dividend yield certainly has. Pfizer’s dividend is now almost 5% if you can believe it… coupled of course with a stock price decline of several dollars in as many months. Seeking Alpha published FP Trading Desk’s view of the stock with commentary from a Goldman Sach’s analyst that makes a compelling, albeit brief, argument for buying the stock.   Most of the negative views of the stock involve the expiration of patent protection on several key drugs including Lipitor. With increased generic competition and an unknown future, the negatives involve concern over Pfizer’s gross sales and market growth, reasoning the company will be hit hard over the next five years, especially between 2010 and 2011.Â
    But Pfizer itself believes their drug pipeline is strong with a recent statement from John LaMattina, their President of Global R&D (via AP) that ”I think so far we’re on track to deliver on the goal of tripling the number of compounds in the Phase III pipeline by 2009.” He also indicates that “Pfizer has 11 programs in final testing stages, up from eight, and 47 programs in its mid-stage pipeline compared with 32 last year,”  and called the Phase II portfolio the “largest in the company’s history.” Pretty strong statements from within the company, even though they’ve shut down up to 13 drug research programs as well this year. Pfizer also recently received approval from the U.S. Food and Drug Administration for a new HIV/AIDS drug named Selzentry.
  I have no idea where the stock will tread over the short-term, but as an investment it fits my personal strategy for a dividend-based value opportunity for a long-term buy… probably a very long-term buy however. The stock has been trading within a dollar of its 52-week low for several weeks now, and although it may go lower, offers an incredible dividend with low trailing P/E of around 10. Of course the forward P/E is also around 10 based on estimates, with an earnings growth (PEG) ratio around 2.6. It’s not an exciting story by any means, and the company’s quarterly revenue growth is down more than 5%. I like the dividend however and believe the company’s 22 Billion dollars in cash will keep it safe, and in fact allow it to increase over the coming years. If the stock remains a laggard or only grows incrementally for a few years, I’ll take the dividend reinvestments. For me this is a long-term value pick, and I’ll work to hold on to it for 10 years or more. As always, do your own research!
Full Disclosure:Â Own Pfizer stock at time of writing.
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