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| Symbol | Sector | Return | Exposure | Trades | Last Trade | Status | |
|---|---|---|---|---|---|---|---|
| PFE | Pharmaceuticals | -10.65% |
|
5 | 13-Nov-08 | Currently Holding |
21-Apr-08
Unloved stock, take the yield
Holding Rationale for PFE.
Simple rationale here, and it doesn't take an MD to understand. Pfeizer has been flogged by the market, maybe fairly, for various company and industry specific reasons. However...
The company is spewing cash ($13B in 2007) well enough to cover dividends (~$8.5B in 2007) and then some. My conclusion: the board won't even consider cutting the dividend since there's no need to do so, and the street would destroy them if they did. Thus, if the stock goes nowhere, you get a 6.3% coupon payment. If the stock continues to get beaten down (which is very possible), your yield will go even higher. Eventually the sector & stock will come back into favor and you'll be positioned to ride the share price higher. Until then, just cash the checks and smile...
Note, there is the possibility that the board could cut dividends to fund a major acquisition, but this is a remote possibility (on Q1-08 conference call they stated that they're looking for small targets, not big ones) but if this happened, the stock would most likely benefit.
Posted at 15:05 in Holding Rationales | Permalink | Comments () | Top
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