Dividend Durability Meets Value: Why PFE, VZ, and TU Offer Safe, High-Yield Opportunities

In a market fixated on growth and disruption, three stalwarts—Pfizer (PFE), Verizon (VZ), and Telus (TU)—are offering income investors a rare combination: high dividend yields (up to 7.6%), fortress balance sheets, and valuation discounts relative to their peers. These stocks are being overlooked by growth-focused investors, creating an opportunity to lock in payouts that outpace Treasury yields by a wide margin. Let's dissect why these companies are worth a closer look.

Pfizer (PFE): A Pharma Giant's Dividend Resilience

Pfizer's dividend yield of 7.54% (as of June 2025) is a standout in a sector known for stability but not exuberance. The company's payout ratio—currently 125% of trailing earnings—is elevated, but forward estimates project a 56.77% payout ratio for 2026, signaling sustainability. Backed by $11.2 billion in free cash flow (vs. $9.6 billion in dividends), Pfizer's cash machine remains intact despite the post-pandemic decline in vaccine revenue.

Valuation Edge:
PFE's EV/EBITDA of 6.9x (vs. a 10-year average of 9.1x) and P/E of 12.4x (below the Health Care sector's 16.3x multiple) reflect undervaluation. The stock has underperformed the S&P 500 by 20% over the past year, even as it grows its pipeline with oncology and rare disease therapies.

Growth Catalyst: The FDA's recent approval of its Alzheimer's drug, V950, and partnerships in mRNA tech provide long-term tailwinds.

Verizon (VZ): Telecom's Defensive Dividend Champion

Verizon's 6.2% yield is bolstered by a 64% payout ratio—comfortably below the 80% danger zone. Despite losing wireless subscribers early in 2025, the company's $48.1 billion EBITDA and $11.5 billion in free cash flow (up 5%) ensure dividends remain secure.

The FCC's approval of its $20 billion Frontier acquisition in May 2025 adds 4 million broadband customers, expanding its 5G footprint and reducing reliance on mobile competition.

Valuation Outlook:
VZ's EV/EBITDA of 7.3x is slightly above the telecom sector's 7.28x median but still reasonable for a cash-rich operator. Its P/E of 15.2x trails its 10-year average of 12.3x, but this reflects higher earnings stability.

Risk Reward: Verizon's stock trades at 8.5x forward earnings, a discount to its 10-year average of 12.8x, making it a compelling income play with upside potential as the Frontier deal boosts margins.

Telus (TU): Canadian Telecom's High-Yield Gamble

Telus' 7.6% yield tops the list, but its 232% payout ratio raises red flags. The company's free cash flow of $1.06 billion is strong, but the dividend's sustainability hinges on cost discipline and growth in its healthcare and cloud services divisions.

Valuation Caution:
TU's metrics are mixed. Its EV/EBITDA of 9.5x exceeds the telecom sector's 7.32x median, and its P/E of 28.5x (vs. a 10-year average of 21.5x) suggests it's priced for perfection. However, its $70 billion 10-year capital plan for fiber and healthcare tech could justify the premium if executed well.

Verdict: TU is a high-risk, high-reward bet. Investors must weigh its sky-high yield against execution risks in its ambitious projects.

Investment Thesis: Why These Stocks Belong in Income Portfolios

• PFE and VZ are defensive buys. Both offer yields over 6%, robust free cash flow, and valuation discounts. PFE's pipeline and VZ's network dominance provide growth anchors.
• TU is a speculative call. Its yield is unmatched, but its payout ratio and valuation premium demand close monitoring.
• Sector Rotation Play: Telecom and pharma are undervalued relative to tech-heavy indices. As interest rates stabilize, these high-yield stocks could rebound sharply.

Action Items for Income Investors

1. Buy PFE: A 7.5% yield with a sustainable forward payout ratio makes it a core holding.
2. Accumulate VZ: Its 6.2% yield and undervalued EV/EBITDA offer a safer entry point than TU.
3. Monitor TU: Wait for a dip below $16 before entering; avoid if the payout ratio doesn't improve.

In a world of 4% bonds, these stocks offer superior income—and the chance to profit from market pessimism.

Final Take: High yields aren't always a trap when paired with strong cash flows and undervalued metrics. Pfizer and Verizon are clear buys here, while Telus requires a higher risk tolerance. For income investors willing to look beyond FAANGs, this trio offers a rare blend of safety and upside.