Motley Fool: A Pfat dividend yield

Pfizer’s (NYSE: PFE) sales of COVID-19 products are at a fraction of their levels from a few years ago. Meanwhile, the company faces the loss of patent exclusivity for many drugs – including Inlyta, Xeljanz, Eliquis, Xtandi, the Vyndaqel brand family, and Mektovi – over the next three years.

Pfizer may seem like a poor investment, despite its recently very low forward-looking price-to-earnings (P/E) ratio below 9; however, there’s a better story to this big drugmaker than meets the eye.

Pfizer’s sales for the products losing exclusivity won’t dry up overnight. More important, the company has multiple products that should generate strong growth, including bladder cancer drug Padcev, multiple myeloma drug Elrexfio, and respiratory syncytial virus (RSV) vaccine Abrysvo.

And don’t forget Pfizer’s pipeline: It features 108 candidates, 28 of which are in phase 3 (late-stage) testing. Another four await regulatory approvals. It’s also growing by acquisition, recently aiming to buy Metsera, a company that has four weight-loss drug candidates.

Finally, Pfizer’s dividend yield – recently around 7.1% – helps boost the stock’s total return significantly. While Pfizer does face some challenges, its dividend can compensate long-term investors for those risks. (The Motley Fool owns shares of and recommends Pfizer.)

Ask the Fool

Q. What, exactly, is deflation? – B.S., Draper, Utah

A. It’s the opposite of inflation, and it’s what you call an economic environment where prices have been falling. That means your income will buy you more goods and services, but it’s not all positive – and deflation can be worse than inflation.

Deflation generally occurs when demand falls and supply increases. Supply increases when production costs drop, often due to technological advances. Demand can fall when consumers are worried about the economy and choose to spend less and save more; overall pessimism can also lead to less spending.

Deflation is dangerous because when prices are falling, consumers may put off purchases, hoping for even lower prices, which causes the economy to slow down. A slowing economy can lead to job losses and rising unemployment, and when companies have less money coming in, they’re less likely to invest in further growth. Wages can be reduced as well, and businesses and people earning less money can have trouble paying off their debts. All this could turn into a vicious cycle – and a severe recession.

Deflation-fighting moves include injecting more money into the economy (which can spur inflation) and lowering interest rates.

Q. What are “catastrophe bonds”? They don’t sound like something I’d want to buy. – E.G., Washington, Pennsylvania

A. Often referred to as “cat bonds,” they’re bonds sold by insurance companies to help them cover the costs of catastrophes such as hurricanes or earthquakes. These bonds offer relatively high yields and diversification for your portfolio, but you could lose your entire principal if a predefined event occurs within the (typically multiyear) life of the bond.

My dumbest investment

My most regrettable investing move is one I didn’t make. In 1974, a friend wanted me to give him $1,000, which he would eventually invest into real estate in the San Francisco Bay area. Long story short, he now owns three homes, and I live in a mobile home. – D.M., online

The Fool responds: You’ve probably kicked yourself a lot over this story, but remember that only hindsight is 20/20. You couldn’t have known way back in 1974 what would happen to real estate values in San Francisco. (Some, of course, had hunches – and some of them were right.)

Recently, the San Francisco area was the third-most-expensive housing market in the U.S. (per Realtor.com), with a median listed price for homes for sale of $1.32 million. The San Jose area, a bit south of San Francisco, was ranked No. 1, with a median list price of $2.02 million.

You might think about what you did instead with any investable sums over the years. If, for example, you’d invested $1,000 in the S&P 500 back in 1974, your stake would have grown to be worth around $267,000 by 2025. If you’d added to that investment over time, you’d be sitting on even more.

Rewarding lives can be lived in mobile homes – we hope you’re living well.

Do you have a smart or regrettable investment move to share with us? Email it to TMFShare@fool.com.