Which Is the Top Dividend Stock? Pfizer Inc. vs. Gilead Sciences, Inc.

Dividend StockIs Gilead or Pfizer a Better Dividend Stock?

Gilead Sciences, Inc. (NASDAQ:GILD) and Pfizer Inc. (NYSE:PFE) are two of the heavyweights in the biopharmaceutical industry. But for an investor with limited funds, which stock is the best dividend stock in healthcare?

Let’s dig into their fundamentals to see which dividend stock is a better play for the long haul.

Remember that the healthcare sector is traditionally considered recession-proof. The reason is obvious. People get sick and buy drugs regardless of how the economy is faring.

That said healthcare stocks are generally promising bets, especially if held long-term. But unlike traders who trade in the short-term, long-term investors look for value in stocks. For that, there’s no better way to gauge two investments than to compare their fundamentals.

Dividends

Pfizer stock boasts a dividend yield more than twice that of GILD stock. With a stellar 4.04% dividend yield, Pfizer beats Gilead.

Winner: PFE stock

Dividend History

Gilead’s dividend history is barely a year long; the company started paying out dividends only last year. Pfizer, on the other hand, is a dividend aristocrat with a two-decade-long history of payouts. Here, Pfizer is the undisputed winner.

Winner: PFE stock

Earnings Growth

Gilead stock is for investors looking for growth, while Pfizer stock is for investors looking to invest in a mature company. In the last three years, Gilead’s earnings and revenue have been growing at a robust pace. On the contrary, Pfizer’s bottom- and top-line growth have been receding. Speaking solely in terms of growth, Pfizer loses to Gilead.

Winner: GILD stock

Price Multiples

GILD stock is currently trading at only seven times its forward earnings, while Pfizer is trading at nearly 12 times its forward earnings. Gilead is, hands down, the cheaper investment.

Winner: GILD stock

Margins

Margins are a good way to gauge a company’s ability to withstand an economic downturn. A company with higher margins can always cut prices and still manage to make profits. Companies with low margins do not enjoy that privilege and may face losses during prolonged recessions. Pfizer’s operating and profit margins are 26.5% and 14.0%, respectively, while Gilead’s top- and bottom-line margins are a whopping 68% and 55%, respectively. Gilead is the clear winner here.

Winner: GILD stock

Debt Load

With a debt to equity ratio of 1.2, Gilead has more than twice the debt load on its balance sheet than Pfizer. Here, Pfizer beats Gilead with a debt to equity of 0.6.

Winner: PFE stock

Product Portfolio

Gilead’s product portfolio is relatively smaller than Pfizer’s, covering mostly HIV, cardiovascular, liver, and respiratory diseases. On the contrary, Pfizer’s portfolio covers almost every form of disease—including the ones Gilead covers—in addition to vaccines, oncology drugs, general consumer healthcare drugs, and even treatments for rare diseases. Needless to say, Pfizer beats Gilead here.

Winner: PFE Stock

The Bottom Line

If you’re looking for a cheap long-term growth play with a modest dividend yield but solid top- and bottom-line growth, GILD stock is the best pick.

If, however, you want a slow-growth dividend play with a robust yield and a diversified hold over the healthcare sector, PFE stock is a better name.

These two stocks are neck and neck, but Pfizer beats Gilead by one point. Pfizer takes the trophy!