For income-seeking investors Pfizer's market-leading 7.3% yields looks awfully tempting. But other healthcare stocks, with lower yields but firmer growth prospects may be a better bet.

Finding stocks with generous dividends isn't easy these days, and with packaged food giant Conagra recently getting demoted from the S&P 500, Pfizer is now the highest yielding stock in the benchmark index. The drug company, which has made quarterly payouts more than 80 straight years, is certain to get a lot of attention from dividend hunters.

But for investors who want safe payouts and are looking for near-term profit growth to help deliver a solid total return, other healthcare names like Bristol Myers Squibb, with 4.4% yield, and Medtronic, yielding 3.5%, may be better bets.

Pfizer's high yield reflects investors' trepidation over the stock. Over the past three years, shares have returned negative 18%, including the dividend, compared to a gain of 7% for Bristol Myers and 8% for Medtronic.

After riding high during the pandemic era, Pfizer has faced a host of problems. While Pfizer's Covid vaccine, Comirnaty, and treatment Paxlovid, were enormous hits, demand declined faster than expected as virus fears subsided. While some rivals have ridden the GLP-1 weight loss boom, Pfizer's own entrant flopped after trials showed strong side effects. Meanwhile, the company faces a patent cliff for blockbusters like cancer treatment Ibrance and blood thinner Eliquis, both of which lose exclusivity in the next two years.

The company hasn't been shy about spending its Covid-era war chest, buying cancer treatment company Seagen for $43 billion in 2023 and Metsera for $10 billion in November. Metsera offers a promising second crack at the weight-loss market, with a once-a-month injectable currently in clinical trials. But neither acquisition has yet delivered strong enough results to mollify Wall Street.

On average, analysts forecast Pfizer's profits to decline 8% in 2026 and 4% in 2027, according to FactSet. While CEO Albert Bourla recently promised high-single-digit revenue growth from 2029 through 2033, that is a long time to wait. Of 29 analysts that cover the stock, nine are buys, with 18 holds or two sells.

Pfizer has said it is committed to maintaining and growing the dividend, although growth is forecast to be "over the long term." The payout has looked stretched in recent quarters. The dividend has cost the company about $9.8 billion over the past 12 months, while Pfizer generated $12 billion in operating cash flow and $9.5 billion in free cash flow, which subtracts capital expenditures. Pfizer declined to comment beyond its previous public statements.

Bristol Myers and Medtronic -- both of which are recent Barron's stock picks -- have a clearer path to short-term growth and dividends with a lot more breathing room.

Like Pfizer, Bristol Myers faces an upcoming patent cliff -- the companies share profits from Eliquis, which is a collaboration between the two drug amers. But Bristol Myers has had better luck filling the revenue hole. First-quarter sales of oncology treatment Breyanzi rose 56% year over year to more than $410 million, while those of antipsychotic Cobenfy doubled to $56 million.

All in all, Wall Street analysts expect profits to grow around 3% in 2026, suggesting a total return, including the dividend, of around 7%. Meanwhile, Bristol Myers generated nearly $12 billion in free cash flow over the trailing 12 months, according to FactSet, while the dividend cost just $5 billion.

Medtronic, meanwhile, has seen strong growth from its cardiovascular business, where revenue grew 14% to $3.8 billion for the April quarter. Wall Street analysts expect profits to grow around 8% in 2026, implying a total return of more than 10%, if you factor in the dividend yield. The company generated $5.4 billion in free cash flow, while the dividend cost just $3.6 billion.

Write to Ian Salisbury at ian.salisbury@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

July 07, 2026 15:33 ET (19:33 GMT)

Copyright (c) 2026 Dow Jones & Company, Inc.