Pfizer's Payout Ratio Is Still Over 100%. Is a Dividend Cut Inevitable?

A key ratio for dividend investors when looking at dividend stocks is the payout ratio. Since it tells you how large the dividend is with respect to earnings, it can be a good gauge of whether or not the dividend is safe and sustainable, or if a cut may be around the corner. It’s not perfect, but it can be helpful when assessing dividend stocks.

Pfizer (PFE 1.68%) recently reported earnings, and its payout ratio is once again over 100%. Given that the stock is paying a fairly high yield of 6.4%, which is far above the S&P 500 average of 1.2%, could a cut be coming soon?

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Impairment charges have been weighing down its profits

Pfizer pays a quarterly dividend of $0.43 per share, which translates into an annual payout of $1.72. If the company’s annual per-share profit falls below that, then its payout ratio is in excess of 100%.

Last month, the company reported its fourth-quarter earnings and wrapped up its performance for the previous year. For the last three months of 2025, Pfizer actually incurred a loss, and its earnings per share (EPS) were a negative $0.29. This was due to asset impairment charges totaling around $4.4 billion. Pfizer’s full-year EPS was $1.36, which was down from $1.41 in the previous year.

However, in both 2025 and 2024, the pharmaceutical company incurred billions in impairment charges, which adversely impacted its bottom line. Thus, given this context, its financial performance is better than what its EPS would indicate.

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NYSE: PFE

Pfizer

Today’s Change

(-1.68%) $-0.46

Current Price

$26.59

Key Data Points

Market Cap

$154B

Day’s Range

$26.35 - $27.10

52wk Range

$20.91 - $27.94

Volume

861K

Avg Vol

47M

Gross Margin

66.23%

Dividend Yield

6.36%

Is Pfizer’s dividend actually safe?

Pfizer is a company that’s in the midst of transition as key drugs lose patent protection and the business works on developing new products and getting back to growing. This is the biggest question mark with the company moving forward, because if Pfizer needs to allocate more money toward its growth strategy, then the dividend may start to get in the way. That may already be starting to be the case now, as last year the company’s free cash flow totaled $9.1 billion, while its dividend payments totaled just under $9.8 billion.

For now, Pfizer’s dividend still looks safe simply because its financials aren’t as bad as they look due to non-cash impairment charges. But there is still uncertainty around how the business will do in the long run. This can be a good dividend stock to hang on to, but only if you’re comfortable keeping a close eye on it. If you’re a risk-averse investor who wants a safe dividend stock that you won’t have to worry about at all, then you might want to consider other income investments instead.