Key Takeaways
- Pfizer yields 6%, more than three times Johnson & Johnson’s 1.9%, and both companies raised their 2026 guidance this fall.
- Pfizer’s dividend took 89% of its free cash flow over the twelve months to June, and more than all of it in fiscal 2025, while Johnson & Johnson’s took 62% over the twelve months to September.
- Analysts expect Pfizer’s revenue to fall to $55.4 billion by fiscal 2028 as key drugs lose exclusivity, while Johnson & Johnson’s sales grew 6% last quarter.
- The things to watch are Johnson & Johnson’s talc settlement, which needs 95% of the remaining ovarian claims to sign on, and Pfizer’s aim for high single-digit revenue growth from the end of 2028 through 2033.
Pfizer (PFE) raised its 2026 revenue guidance on Nov. 3, to $62.0-$64.0 billion from $60.5-$62.5 billion, and its stock yields 6.0%. That’s more than three times the 1.9% from Johnson & Johnson (JNJ), which raised its own outlook in October.
For a dividend investor, a gap that big is tempting. But a 20-year holder needs the check to keep coming and keep growing for two decades. So which one would I hold?
| Metric | Pfizer (PFE) | Johnson & Johnson (JNJ) |
|---|---|---|
| Dividend yield | 6.0% | 1.9% |
| Dividend growth, fiscal 2020-2025 | 2.5% a year | 5.2% a year |
| Cash dividend payout ratio (TTM) | 89% (to June 28, 2026) | 62% (to Sept. 27, 2026) |
| Net debt/EBITDA | 1.9x | 0.8x |
| Interest coverage | 7.0x | 26.8x |
| Forward P/E | 10x | 25x |
Source: TIKR, as of Nov. 9, 2026.
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Pfizer pays out almost all of its free cash flow
Pfizer’s newer drugs are doing the heavy lifting. Launched and acquired products such as Padcev, Nurtec and the Vyndaqel family grew 32% operationally in the third quarter. That offset falling Covid sales, with Paxlovid down 63%, and kept revenue relatively flat operationally at $16.6 billion.
The dividend has less room. Pfizer paid $9.79 billion in dividends over the twelve months to June 28, 2026. That’s a risky 89% of its $10.98 billion of free cash flow. The chart shows free cash flow falling from $29.9 billion in fiscal 2021 to $9.08 billion in fiscal 2025, with dividends paid topping it in fiscal 2023 and fiscal 2025:
On Pfizer’s second-quarter call in August, Chairman and CEO Albert Bourla said that “even the most stretched scenarios that we are running, we will be able to maintain our dividend.” The $0.43 quarterly dividend it declared Oct. 6 keeps the $1.72 annual rate it paid per share in fiscal 2025.
Johnson & Johnson has room to spare
Johnson & Johnson has its own drug in decline, as biosimilars cut into Stelara’s sales, but its newer drugs are more than making up for it. Third-quarter sales rose 5.9% to $25.4 billion, and Innovative Medicine grew 7.7% on cancer drugs like Darzalex and Carvykti and immunology launches like Tremfya and Icotyde.
J&J’s dividend is also far better covered. It paid $12.72 billion in dividends over the twelve months to Sept. 27, 2026, a well-covered 62% of its $20.59 billion of free cash flow. The chart shows free cash flow holding between $17.5 billion and $20.2 billion a year from fiscal 2017 to fiscal 2025, while dividends paid rose from $8.62 billion in fiscal 2016 to $12.4 billion:
Talc is the main risk. J&J’s third-quarter report carried $5.5 billion of pre-tax charges for its proposed ovarian talc settlement. Free cash flow held up, at about $15.1 billion through nine months against $14.2 billion a year before. The settlement needs at least 95% of the remaining ovarian claims to take part, and CFO Joseph Wolk said, “We are trending to meet the 95% threshold.”
So which dividend wins?
Johnson & Johnson is the one dividend stock I’d hold for the next 20 years.
On paper, that choice gives up income. At each company’s five-year growth rate, $10,000 in Pfizer would pay about $15,332 in dividends over 20 years. The same $10,000 in J&J would pay about $6,450, and J&J’s yearly income wouldn’t pass Pfizer’s for more than 30 years.
To get there, though, Pfizer would have to raise its dividend for 20 years from a payout that already takes 89% of free cash flow. And analysts expect its revenue to shrink:
The consensus of 22 analysts has revenue falling from $62.6 billion in fiscal 2025 to $55.4 billion in fiscal 2028, as Eliquis, Ibrance and Xtandi lose exclusivity.
This isn’t to say Pfizer’s dividend is in trouble. Pfizer is on track to deliver nearly all of its $7.2 billion in net cost savings by the end of 2026, and it plans another $2.5 billion from 2027 to 2029. At 10x forward earnings, investors aren’t paying much for that 6.0% yield either. It’s just that over 20 years, I’d rather own the dividend the business can comfortably keep raising.
Of course, Pfizer says it has a line of sight to risk-adjusted, high single-digit revenue growth from the end of 2028 through 2033. If it gets there, its dividend would have room to grow again.
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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!
