Pfizer's Payout Ratio Is Still Over 100%. Is a Dividend Cut Inevitable?

By David Jagielski, CPA – Mar 9, 2026 at 2:00PM ESTKey PointsPfizer's per-share profit in 2025 declined as the company incurred significant impairment charges.The company also paid out more in dividends than it generated in free cash flow.Question marks about its future growth could impact the safety of its dividend.A key ratio for dividend investors when looking at dividend stocks is the payout ratio. Since it tells you how large the dividend is with respect to earnings, it can be a good gauge of whether or not the dividend is safe and sustainable, or if a cut may be around the corner. It's not perfect, but it can be helpful when assessing dividend stocks. Pfizer (PFE 1.44%) recently reported earnings, and its payout ratio is once again over 100%. Given that the stock is paying a fairly high yield of 6.4%, which is far above the S&P 500 average of 1.2%, could a cut be coming soon? Image source: Getty Images. Impairment charges have been weighing down its profits Pfizer pays a quarterly dividend of $0.43 per share, which translates into an annual payout of $1.72. If the company's annual per-share profit falls below that, then its payout ratio is in excess of 100%. Last month, the company reported its fourth-quarter earnings and wrapped up its performance for the previous year. For the last three months of 2025, Pfizer actually incurred a loss, and its earnings per share (EPS) were a negative $0.29. This was due to asset impairment charges totaling around $4.4 billion. Pfizer's full-year EPS was $1.36, which was down from $1.41 in the previous year. However, in both 2025 and 2024, the pharmaceutical company incurred billions in impairment charges, which adversely impacted its bottom line. Thus, given this context, its financial performance is better than what its EPS would indicate. ExpandNYSE: PFEPfizerToday's Change(-1.44%) $-0.39Current Price$26.66Key Data PointsMarket Cap$154BDay's Range$26.35 - $27.1052wk Range$20.91 - $27.94Volume873KAvg Vol47MGross Margin66.23%Dividend Yield6.36% Is Pfizer's dividend actually safe? Pfizer is a company that's in the midst of transition as key drugs lose patent protection and the business works on developing new products and getting back to growing. This is the biggest question mark with the company moving forward, because if Pfizer needs to allocate more money toward its growth strategy, then the dividend may start to get in the way. That may already be starting to be the case now, as last year the company's free cash flow totaled $9.1 billion, while its dividend payments totaled just under $9.8 billion. For now, Pfizer's dividend still looks safe simply because its financials aren't as bad as they look due to non-cash impairment charges. But there is still uncertainty around how the business will do in the long run. This can be a good dividend stock to hang on to, but only if you're comfortable keeping a close eye on it. If you're a risk-averse investor who wants a safe dividend stock that you won't have to worry about at all, then you might want to consider other income investments instead.Read NextMar 9, 2026 •By Prosper Junior Bakiny2 Top AI Healthcare Stocks to Buy and HoldMar 4, 2026 •By Reuben Gregg BrewerForget Teva: This Dividend Top Dog Is the Real Value Buy TodayMar 2, 2026 •By Selena Maranjian1 Reason I'd Happily Buy Pfizer (PFE) Stock and Never SellMar 1, 2026 •By Prosper Junior BakinyForget Regencell Bioscience: This Blue Chip Drug Maker Is the Boring Compounder You NeedFeb 24, 2026 •By Reuben Gregg BrewerThis Dividend Giant Pfizer Could Turn a Boring Healthcare Allocation Into Serious IncomeFeb 21, 2026 •By Rick OrfordMassive News: Pfizer's 6% Dividend Could Be Safer Than You ThinkAbout the AuthorDavid Jagielski, CPA, has been a contributing Motley Fool stock market analyst covering healthcare, consumer staples, consumer discretionary, and technology stocks since 2017. David has more than 10 years of experience in finance roles across businesses of different sizes and sectors. He holds a Certified Public Accountant designation in Canada.TMFdjagielskiStocks MentionedPfizerNYSE: PFE$26.66(-1.44%)-$0.39*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.