Pfizer (PFE) yields nearly 7% as COVID drugs crater, while Merck (MRK) compounds at 66% one-year gains with a leaner 3% payout.
Pfizer runs 20 pivotal trials in 2026 targeting obesity and oncology, with a Vyndamax patent extension to 2031 protecting dividend coverage.
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Pfizer (NYSE:PFE) and Merck (NYSE:MRK) refreshed the dividend debate with their latest quarterly reports.
Pfizer defends one of Big Pharma's fattest yields while its COVID franchise fades. Merck absorbs multi-billion dollar deal charges to reload a pipeline behind Keytruda. Two payouts, two very different risk profiles for income investors.
Pfizer's most recent quarter showed the post-pandemic pivot in motion. Revenue reached $14.45B, ahead of the $13.80B estimate, with launched or acquired products growing 22% operationally.
Padcev jumped 39% to $591M on urothelial cancer share gains, Nurtec ODT climbed 41% to $353M, and Eliquis added 13% to reach $2.17B. Comirnaty fell 59% and Paxlovid dropped 62%. Adjusted EPS of $0.75 marked a fifth straight beat, though net income slid 9.44%.
Merck's story tilts toward scale. Revenue landed at $16.29B, topping the $15.85B consensus. Keytruda produced $8.03B, up 12%, and the subcutaneous version Keytruda QLEX added $128M out of the gate. Winrevair surged 88% to $525M. Reported EPS of -$1.28 was dragged by a $9B Cidara acquisition charge, alongside a Gardasil slide of 19% after China's catch-up program ended.
The dividend math tells the real story. Pfizer pays $0.43 quarterly ($1.72 annualized) against a 6.75% yield, with raises every Q1 since 2010. Merck lifted its quarterly dividend from $0.81 to $0.85 starting Q1 2026, with a forward annualized rate of $3.40, roughly 2.6% at recent prices.
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Pfizer paid out $2.4B in dividends in the March quarter and confirmed no buybacks in 2026.
Merck is spending cash on deals: Verona Pharma, Cidara, and a pending Terns transaction adding $2.35 per share in charges. CEO Robert Davis told investors the goal is "a diversified set of growth drivers across a broad set of therapeutic areas." That signals a portfolio pivot ahead of any payout expansion.
Pfizer runs roughly 20 pivotal trials in 2026, including 10 from the Metsera obesity purchase. Albert Bourla flagged "oncology and obesity, two areas where I believe Pfizer is positioned to lead."
The Vyndamax patent settlement extending U.S. exclusivity to June 2031 removes a real overhang for dividend coverage. Watch whether obesity Phase 3 readouts show differentiation against GLP-1 incumbents.
Merck's watchlist differs. Keytruda QLEX adoption, Winrevair's PAH ramp, and the Terns closing shape whether the raised $65.8B to $67B revenue band holds. Interest expense climbed from $313M to $479M, so leverage carries a real cost.