Better Income Stock: Pfizer or Altria Group?

When it comes to income investing, two prominent names often come to mind: Pfizer (NYSE:PFE) and Altria Group (NYSE:MO). Both companies offer attractive dividend yields, but which one is the better choice for income-focused investors? Let's delve into the details and compare these two giants in their respective industries.

Pfizer, a pharmaceutical titan, boasts a 6.44% annual dividend yield, with a payout ratio of 75.86%. This indicates that a significant portion of its earnings is distributed as dividends, making it an attractive option for income investors. Pfizer has a 15-year history of consecutive dividend increases, averaging 5.16% over 20 years. Its dividends are paid quarterly, providing a steady stream of income.

On the other hand, Altria Group, a tobacco powerhouse, offers a higher dividend yield of 7.63%, with a payout ratio of 81.63%. Altria's dividend growth has been more modest, averaging 3.82% over 20 years. Its dividends are also paid quarterly, but its higher yield makes it a more attractive choice for income-focused investors.

However, it's essential to consider the sustainability and safety of these dividends. Pfizer's diversified drug portfolio and strong cash flow provide resilience, while Altria's reliance on tobacco products poses long-term risks. Pfizer's lower payout ratio indicates more flexibility for future increases, while Altria's higher ratio raises concerns about its ability to maintain its dividend in the face of earnings declines.

When comparing the historical dividend yields of Pfizer and Altria Group, we can see that both companies have offered attractive income opportunities over the past decade. Pfizer's yield has fluctuated between 3% and 6%, with a recent high of 6.44%. This trend can be attributed to the company's consistent dividend growth and strong cash flow. Altria Group, on the other hand, has maintained a higher yield, ranging from 6% to 8%, with a current yield of 7.63%. This trend is driven by the company's stable earnings and a commitment to returning capital to shareholders.



In conclusion, both Pfizer and Altria Group offer attractive income opportunities, but they cater to different investment objectives. Pfizer's growth potential and lower payout ratio make it an appealing choice for investors seeking a balance between income and capital appreciation. Altria Group, with its higher yield, is more suitable for income-focused investors willing to accept the long-term risks associated with the tobacco industry. Ultimately, the choice between Pfizer and Altria Group depends on an investor's individual preferences and risk tolerance.