Ah the purchase of a fresh new stock and allocation of sweet capital to generate more passive income. This is the snowflakes adding to the proverbial snowball rolling to financial freedom. I recently purchased 100 shares of Pfizer for $33.3899 (love those random prices and saving $.0001) of the company. I chose Pfizer for a couple of reasons, but one of the main ones is the consistency in pricing. I initially owned Pfizer back when I first graduated college in the mid 2000’s and sold at a minor profit before I really had any strategy towards buying and selling stocks. I was a naive kid who dabbled in the market, but didn’t truly understand it. Back when I initially purchased it, it was in the low $30’s and now ten years later it’s still in the low $30s as seen by the chart below.
So if the stock price has been essentially flat or returned minimal capital appreciation in the last decade, why would I be interested in it? Let’s start with a breakdown of the company. For those unfamiliar, Pfizer is a drug manufacturer listed on the NYSE and part of the Dow Jones Industrial Average since 2004. It produces a wide range of drugs suchs as Lipitor, Viagra, Celbrex, and Lyrica which are generally household names. Pjizer is one of the largest pharmaceutical companies in the world with revenue of almost $50 billion annual revenue. With it’s large position in the market and the shifting cultural demographics I view Pfizer as a solid long term play. Right now 14.5% of the US population is over the age of 65, by 2040 it is projected to be 21.7% based on projections from the Administration for Community Living. This equates to 70,000,000 people in just the United States alone, let alone for what it means for an aging world population increasing reliant on drugs to improve quality of life as we age. While this appears to have been stagnant for the last decade, I view drug companies as necessities as we go forward and something that can have meaningful growth in the next decade or two. I also like the fact that I don’t believe that this has gotten ahead of the market as much as many other sectors within the heath care industry based on political calls for reform from the current parties in power. Pfizer carries a five year dividend growth rate of 8.40% as of September 2016 and yield a 3.81% currently at market price. This is not the highest yielding drug manufacturer, but not the lowest either and I believe with the brand power and scope of their operations leave meaningful room to continue to grow.
Overall this adds $128 a year to my passive snowball and expected payments are March, June, September, and December. All months I’m already heavy in dividend income so I didn’t smooth out my income on a monthly basis, but I like the pick overall from a long term perspective with DRIP invested.