Wow we are on fire! 🙂 A 3rd buy in less then 2 months and it was just 2 weeks after we have purchase Procter & Gamble. Reason behind such fast buy is simple – today I received 1,7 kEUR bonus for Y2017. Thank you job 🙂 We agreed with my wife that we split this in two and I use half for investment and other half we put aside for further kitchen/balcony repairs. So thats additional 0,8 kEUR for investing. Since I have ‘borrowed’ 400 EUR from my wife for purchase of PG this has netted to additional +400 EUR. Still a good deal I say 🙂
So we bought 16 shares of Pfizer paying 35,93 USD / share or paying 585 USD (incl. fee). With current dividends of 0,34 USD/quarter YOC stands at nice 2,6% after tax (-30%) and tadam! it giving us +15,2 USD or +12,4 EUR annual dividend income and increasing our Passive dividend income to 376 EUR. I mean wow less then 25 EUR away from 400 EUR mark. Do you feel the heat! 🙂
Ok so why Pfizer? First of all I like their quite high yield. On the other hand their dividend history has one fallback. Company decreased their dividend x2 from 0,32$/q to 0,16$/q back in Y2009, but hey these were the extraordinary times. And they did not cut their dividends totally like financial sector did. I know I know its not perfect for dividend investors, but hey I have 2/3 of my portfolio of Baltic companies that increase and decrease their dividend back and froth even in these economic growth times. After Y2009 the company has been increasing their dividends steady each year ever since and now it is at 0,34$ level. Last 5y average dividend growth stands at nice higher single digid of +8%. Last increase was from 0,32$ to 0,34$ and that’s a nice +6%.
If we look at financial figures their top line (sales) are somewhat stuck on same level for the past 5y or even showed signs of decline except last Y2017. What I don’t like is that company showed decline in earnings with their generated EBITDA deteriorating from ~20 bn$ to ~15 bn$ and it this last y2017 it got back to 20 bn$ level. P/E level is quite hard to calculate due to these tax stuff, but forward P/E stands at just 12. Frankly speaking forward earnings look a bit too optimistic for me. If we take into account rough normalized EPS of 2$ then the P/E stands at ~18. Which is still ok taking into account today’s overpriced market. Payout ratio is we take the normalized EPS stands at 68% which is considered as normal payout level.
What I liked about Pfizer was their balance is quite good. Equity stands at acceptable level of 35% and NetDebt/EBITDA is quite low ~1,0. Of course that not perfect but compared to some companies with negative equity is is still quite good. What I don’t like is that equity has deteriorated from ~80 bn$ back in Y2012 to ~60 bn$ today due to share repurchase also draining their cash reserves from 33 bn$ to 17 bn$. Good thing is that this was not done trough growing financial debts like other companies did. Financial debts increase just slightly from 37 bn$ to 44 bn$ and remains in acceptable level as mentioned above.
So thats that. What do you think of Pfizer?