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Pfizer and Eli Lilly: How Dividends and Tax Rates Stack Up

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Feb. 13 2019, Updated 9:00 a.m. ET

Dividend projections

Pfizer (PFE) and Eli Lilly (LLY) reported dividends per share of $1.36 and $2.25 in fiscal 2018, respectively. Analysts expect Pfizer’s dividend per share to rise by 5.88% YoY to $0.36 in the first quarter, 5.96% YoY to $1.44 in fiscal 2019, 4.80% YoY to $1.51 in fiscal 2020, and 5.11% YoY to $1.59 in fiscal 2021.

In its fourth-quarter earnings conference call, Eli Lilly (LLY) reported paying dividends worth $600 million to shareholders and repurchasing $1.1 billion worth of shares in fiscal 2018. The company also announced a 15% rise in dividends for fiscal 2019. Analysts expect Eli Lilly’s dividend per share to rise by 15.45% YoY to $0.65 in the first quarter, 10.54% YoY to $2.49 in fiscal 2019, 2.62% YoY to $2.55 in fiscal 2020, and 4.04% YoY to $2.66 in fiscal 2021. With higher absolute dividends per share, Eli Lilly may prove to be a better pick for income investors as compared to Pfizer.

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Tax rate projections

In its fourth-quarter earnings investor presentation, Pfizer (PFE) has guided for an effective tax rate of 16.0% for fiscal 2019. Analysts expect Pfizer’s effective tax rate to fall by 44 basis points YoY to 16.00% in the first quarter, then rise by 52 basis points YoY to 16.02% in fiscal 2019, by eight basis points YoY to 16.10% in fiscal 2020, and then by two basis points YoY to 16.12% in fiscal 2021.

In its fourth-quarter earnings conference call, Eli Lilly has updated its reported tax rate guidance for fiscal 2019 from 16% to 16.5% and non-GAAP tax rate guidance from 16% to 15%. Analysts expect Eli Lilly’s effective tax rate to drop by 38 basis points YoY to 15.50% in the first quarter, then fall 35 basis points YoY to 15.63% in fiscal 2019, then rise by 12 basis points YoY to 15.75% in fiscal 2020, and stay flat YoY at 15.75% in fiscal 2021.

Next, we’ll discuss key growth drivers for Pfizer in greater detail.

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