Key Takeaways
- Pfizer raised its full-year 2026 revenue guidance on Nov. 3, and CVS Health raised its earnings outlook on Nov. 4 while announcing a plan to split in two.
- Pfizer yields 5.7%, nearly twice CVS’s 3.0%, but its dividend took up 89% of free cash flow over the trailing 12 months, against 29% at CVS.
- CVS’s dividend didn’t rise in fiscal 2025, and the company hasn’t said how it will be divided after the split, expected in the first half of 2028.
- Pfizer carries less debt, but two of its products take Medicare’s negotiated prices in 2027, so its 2027 guidance matters for the dividend.
Pfizer (PFE) raised its full-year 2026 revenue guidance to $62.0 billion-$64.0 billion on Nov. 3. A day later, CVS Health (CVS) raised its own outlook and announced plans to split into two companies, and its stock still fell 12%.
Pfizer pays a 5.7% yield, nearly twice CVS’s 3.0%, but CVS covers its dividend with far more room. So which is the better dividend stock?
| Metric | Pfizer (PFE) | CVS Health (CVS) |
|---|---|---|
| Dividend yield | 5.7% | 3.0% |
| Dividend growth, fiscal 2020-2025 | 2.5% a year | 5.9% a year |
| Cash dividend payout ratio (TTM) | 89% | 29% |
| Net debt/EBITDA (LTM) | 2.0x | 3.2x |
| Interest coverage (LTM) | 7.0x | 3.9x |
| Forward P/E (NTM) | 11x | 11x |
Source: TIKR, Nov. 5, 2026. TTM to June 28, 2026 (Pfizer) and June 30, 2026 (CVS).
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Pfizer’s big check has a thin cushion
Pfizer’s newer drugs are doing the heavy lifting. Launched and acquired products grew 32% operationally in the third quarter of 2026, and Eliquis grew 25%.
On Oct. 6, Pfizer declared its 352nd consecutive quarterly dividend, at the same $0.43 a share it has paid all year. The dividend grew 2.5% a year from fiscal 2020 to fiscal 2025, from $1.52 to $1.72 a share.
Paying it takes most of Pfizer’s cash. Over the twelve months to June 28, 2026, Pfizer paid $9.79 billion in dividends out of $10.98 billion of free cash flow, a risky 89%. Free cash flow dropped from $26.0 billion in fiscal 2022 to $4.79 billion in fiscal 2023, and it came up short of the dividend in fiscal 2023 and fiscal 2025:
Albert Bourla, Pfizer’s chairman and CEO, said on its second-quarter call in August: “We feel extremely confident that we will — even the most stretched scenarios that we are running, we will be able to maintain our dividend.” His promise is to maintain the dividend, and Pfizer’s guidance has no share buybacks in 2026.
The main risk is losing exclusivity on Ibrance, Xtandi and Eliquis outside the US. CFO Cecile Guegan said on the third-quarter call that 2027 guidance will reflect two of its products taking Medicare’s negotiated prices under the Inflation Reduction Act.
CVS has cash to spare, and a breakup ahead
CVS has the opposite problem. Over the twelve months to June 30, 2026, it paid $3.42 billion in dividends out of $11.76 billion of free cash flow, a well-covered 29%. Free cash flow topped the dividend in every fiscal year from 2016 to 2025. The tightest of the last five was fiscal 2024, at 53%:
On Oct. 13, CVS agreed to pay $315 million to settle a Justice Department opioid lawsuit, small next to its free cash flow.
The business is improving, too. CVS raised its full-year cash flow from operations guidance to at least $15.5 billion, from at least $11.5 billion, and expects at least $8.65 of adjusted EPS in 2027, about 13% growth.
The dividend rose 5.9% a year from fiscal 2020 to fiscal 2025, from $2.00 to $2.66 a share. But it didn’t rise in fiscal 2025, and management said on the third-quarter call that CVS will restart buybacks in the fourth quarter.
Then there’s the split. In the first half of 2028, CVS plans to separate its retail pharmacy business, to be called CVS Pharmacy, from Aetna, Caremark and the rest of the company. It says both companies should have investment-grade ratings and the free cash flow to pay an attractive dividend, but it hasn’t said how today’s dividend will be divided between them.
So which dividend wins?
Pfizer is the better dividend stock. It pays nearly twice the income and has the stronger balance sheet.
Put $10,000 in Pfizer, and it pays $570 a year today. The same money pays $300 in CVS. At their five-year rates, Pfizer would pay about $712 in year 10, a 7.1% yield on your cash. CVS would pay about $501 and wouldn’t pass Pfizer until about 2046. At the pace each grew in fiscal 2025 (2.4% for Pfizer, nothing for CVS), it’s about $704 against $300.
That’s not to say CVS’s dividend is unsafe. It’s by far the better covered of the two, its earnings are growing again, and it has the cash to raise its payout. But management is putting spare cash into buybacks, and the split leaves its dividend an open question. Until CVS answers it, I’d rather collect Pfizer’s bigger check from a management team that has made keeping it a priority.
Of course, Pfizer has little room for error. Its 2027 guidance, with those Medicare prices in it, is the next big test.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
