"The silver lining to the market decline is that some of our favorite stocks have fallen into 'buy' territory," says Nilus Mattive. In Dividend Superstars he eyes one favorite, Pfizer (PFE, Financial).
"Pfizer is now trading well below my suggested entry price of $16. In fact, it’s back at levels last seen in 1996! The major catalyst for this sharp decline was Pfizer’s decision to halve its dividend.
"That came on January 27, just two months after the company said it would simply leave the payment flat this year (which was already the first failure to raise in 42 years).
"Investors, myself included, weren’t pleased. On the other hand, Pfizer did have some positive news — it announced a deal to acquire rival drugmaker Wyeth. For a long time, I’ve been telling you to expect Pfizer to make a big purchase.
"While I thought a major biotechnology company would be the best way to get promising drugs and niche R&D operations at a reasonable price, the purchase of WYE gives Pfizer both biotech operations and more traditional drugs, too.
"All told, the new combined company will boast 17 different products each worth a billion or more in annual sales. That’s an awful lot of money coming into the corporate coffers. Plus, Pfizer’s CFO says total cost savings could hit $4 billion by the end of 2012.
"Does the deal completely solve Pfizer’s pipeline problems? No. Wyeth is facing a couple key patent expirations of its own.
"But from a quick initial analysis, it looks like this deal is a good one, and the combined company will begin seeing an earnings boost very quickly. That could lead to a restored dividend, and big gains for the shares.
"And even at the new dividend rate, the stock is sporting a very nice yield. So I recommend you continue holding the stock. If you have yet to purchase either the initial position or the add-on shares, do so now."
The Stock Advisors
www.thestockadvisors.com
"Pfizer is now trading well below my suggested entry price of $16. In fact, it’s back at levels last seen in 1996! The major catalyst for this sharp decline was Pfizer’s decision to halve its dividend.
"That came on January 27, just two months after the company said it would simply leave the payment flat this year (which was already the first failure to raise in 42 years).
"Investors, myself included, weren’t pleased. On the other hand, Pfizer did have some positive news — it announced a deal to acquire rival drugmaker Wyeth. For a long time, I’ve been telling you to expect Pfizer to make a big purchase.
"While I thought a major biotechnology company would be the best way to get promising drugs and niche R&D operations at a reasonable price, the purchase of WYE gives Pfizer both biotech operations and more traditional drugs, too.
"All told, the new combined company will boast 17 different products each worth a billion or more in annual sales. That’s an awful lot of money coming into the corporate coffers. Plus, Pfizer’s CFO says total cost savings could hit $4 billion by the end of 2012.
"Does the deal completely solve Pfizer’s pipeline problems? No. Wyeth is facing a couple key patent expirations of its own.
"But from a quick initial analysis, it looks like this deal is a good one, and the combined company will begin seeing an earnings boost very quickly. That could lead to a restored dividend, and big gains for the shares.
"And even at the new dividend rate, the stock is sporting a very nice yield. So I recommend you continue holding the stock. If you have yet to purchase either the initial position or the add-on shares, do so now."
The Stock Advisors
www.thestockadvisors.com
