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Comparing Dividends and Free Cash Flow for Pfizer and Mylan

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Dividend projections

In fiscal 2018, Pfizer (PFE) reported dividends per share of $1.36, which amounted to a total dividend payment on common stock worth $8.0 billion. The company’s current dividend yield is 3.32%, while its historical five-year average dividend yield is 3.41%. On December 14, 2018, Pfizer issued a press release announcing a 6% sequential hike in the quarterly dividend from $0.34 in the fourth quarter to $0.36 in the first quarter of 2019, payable on March 1, 2019.

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Wall Street analysts have projected Pfizer’s dividend per share to be $1.44, $1.51, and $1.59, for fiscal 2019, fiscal 2020, and fiscal 2021, respectively. These estimates imply a YoY change of 5.87%, 5.09%, and 4.81% for fiscal 2019, fiscal 2020, and fiscal 2021, respectively. In fiscal 2018, Mylan (MYL) didn’t pay dividends to its shareholders. Wall Street analysts don’t expect a change in the company’s dividend policy by 2021. Thus, Pfizer may prove to be a better investment as compared to Mylan for an income investor.

Free cash flow projections

Wall Street analysts have projected Pfizer’s free cash flows to be $17.88 billion, $18.90 billion, and $20.73 billion, for fiscal 2019, fiscal 2020, and fiscal 2021, respectively, which implies a YoY change of 31.19%, 5.70%, and 9.66% for fiscal 2019, fiscal 2020, and fiscal 2021, respectively.

According to its fourth-quarter earnings conference call, Mylan reported adjusted free cash flow of $2.7 billion in fiscal 2018, a YoY rise of $86 million driven mainly by improvements in working capital efficiency as well as reduced capex. The company also reported an adjusted free cash flow to an adjusted net earnings ratio of 115% in fiscal 2018, an indication of a healthy cash flow conversion cycle.

In fiscal 2019, Mylan expects its free cash flow to fall in the range of $1.9 billion to $2.3 billion. Wall Street analysts have projected Mylan’s free cash flows to be $2.29 billion, $2.42 billion, and $2.68 billion in fiscal 2019, fiscal 2020, and fiscal 2021, respectively.

Next, we’ll discuss tax rate, interest expenses, and debt trends for Pfizer and Mylan for fiscal 2019.

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