Key Takeaways
- Pfizer yields 6.3% and GSK yields 4.1%, and both drugmakers face major patent losses before 2030.
- Pfizer’s dividend used a risky 89% of its free cash flow over the twelve months to June 2026, against a well-covered 39% at GSK.
- Pfizer’s CEO says the dividend will be maintained, and GSK raised its dividend 18% in fiscal 2025 after cutting it.
- GSK’s net debt rose to £22 billion after its Nuvalent acquisition, a number to watch alongside both companies’ patent losses.
Pfizer (PFE) CEO Albert Bourla used the company’s Aug. 4 earnings call to settle the dividend question for good. Even in “the most stretched scenarios that we are running,” he said, “we will be able to maintain our dividend.”
That promise deserves a test on a stock yielding 6.3%, with patent losses weighing on Pfizer’s revenue through 2028.
GSK (GSK) has a patent cliff of its own coming, as its drug dolutegravir loses exclusivity between 2028 and 2030. GSK heads into it with a 4.1% yield and a dividend it has already reset: £1.80 a share in fiscal 2025, down from £3.41 in fiscal 2020.
So which is the better dividend stock?
| Metric | Pfizer (PFE) | GSK (GSK) |
|---|---|---|
| Dividend yield | 6.3% | 4.1% |
| Dividend per share, fiscal 2025 | $1.72 | £1.80 |
| Dividend growth, fiscal 2020 to fiscal 2025 | 2.5% a year | -12.0% a year |
| Cash dividend payout ratio (TTM to June 2026) | 89% | 39% |
| Net debt/EBITDA (LTM) | 1.97x | 1.38x |
| Interest coverage (LTM) | 6.98x | 14.65x |
| Forward P/E (NTM) | 9.9x | 9.6x |
Pfizer’s promise, and the cash behind it
Pfizer’s newer drugs are carrying the business. Launched and acquired products grew 18% operationally in Q2 2026, and management raised its 2026 revenue guidance by $500 million at the midpoint, to $60.5 billion to $62.5 billion. COVID is the drag. Pfizer now expects about $4 billion of COVID product sales in 2026, down from about $5 billion before.
The dividend is a tight fit. 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% cash dividend payout ratio. Free cash flow fell from $29.9 billion in fiscal 2021 to $9.08 billion in fiscal 2025, while dividends paid climbed from $8.73 billion to $9.77 billion over the same years.
The dividend took more than all of Pfizer’s free cash flow in fiscal 2023 (192.9%) and fiscal 2025 (107.7%).
Bourla says growth resumes once the loss-of-exclusivity period is over. Until then, Pfizer is counting on cost cuts. It expects about $9.7 billion of net savings through 2029, and its guidance has no share repurchases in 2026. The risk is that the patent losses hitting revenue through 2028 land on a dividend that already uses most of the cash.
GSK reset its dividend, then started raising it
Pfizer kept raising its dividend through a slump in free cash flow, while GSK cut its own. GSK’s dividends paid fell from £4.00 billion in fiscal 2021 to £2.25 billion in fiscal 2023, then rose to £2.56 billion in fiscal 2025. Free cash flow stayed between £5.16 billion and £7.45 billion every year from fiscal 2020 to fiscal 2025.
Over the twelve months to June 30, 2026, GSK paid £2.67 billion out of £6.90 billion of free cash flow, a well-covered 39%.
The business behind it is growing. Sales rose 5% to more than £8.4 billion in Q2 2026 from Q2 2025, and core EPS rose 9%. Specialty Medicines grew 14% and vaccines grew 8%, while General Medicines fell 9%. Management now expects 2026 sales and operating profit in the upper half of its range. GSK sets its dividend in pounds, so the dollar amount a US holder collects moves with the exchange rate.
The risk is debt. GSK’s net debt rose to £22 billion after it bought Nuvalent. By the company’s count, that’s just under 2x its 2025 core EBITDA, above the 1.38x in the table, and it adds around £160 million of interest expense.
So which dividend wins?
GSK is the better dividend stock. Its dividend uses 39% of its free cash flow over the twelve months to June 2026, against 89% at Pfizer, and its sales and core EPS are both growing. That cushion decides it. GSK has room to keep raising its dividend through its patent cliff, while Pfizer has to grow back into its own.
Consider each dividend’s pace now: GSK’s dividend rose 17.6% in fiscal 2025, against 2.4% at Pfizer. At those rates, $10,000 in GSK would out-earn the same in Pfizer by about 2030 and pay about $1,770 in year 10, against about $779. That’s one year’s raise carried forward, so I wouldn’t bank all of it.
Pfizer’s dividend isn’t in trouble. It pays $630 a year on $10,000 today against $410 from GSK, its CEO has said plainly that the dividend will be maintained, and its revenue guidance just went up. It’s just that, with 89% of its free cash flow already going to the dividend, Pfizer has little room for its patent losses to bite harder than planned, and GSK has plenty.
Of course, GSK’s own test is coming. Dolutegravir loses exclusivity between 2028 and 2030, and management expects its operating margin to stay at 28% to 30% or improve through that stretch.
So what is GSK stock actually worth?
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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!
