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The past few years have been tough ones for investors holding shares of Pfizer (NYSE: PFE). The Big Pharma stock is down by more than half from the peak it set in late 2021.

Pfizer's stock price was hammered, but that didn't prevent the company from meeting and raising its dividend commitment. Last December, the pharmaceutical company raised its payout for the 15th consecutive year.

Shares of Pfizer offer an eye-popping 6.1% dividend yield at recent prices. Is the stock a buy for income-seeking investors? To find out, we'll need to weigh its strengths against reasons to avoid the stock.

Reasons to buy Pfizer now

Sales of Pfizer's COVID-19 vaccine, Comirnaty, and its antiviral-treatment Paxlovid soared to a combined $56 billion in 2022. The stock is down because sales of these drugs collapsed faster than expected. The stock could be a smart buy now because the company wisely reinvested a large swath of the proceeds.

Last year, Pfizer acquired Seagen, a cancer drug developer with four commercial-stage therapies, for about $43 billion. Also in 2023, the Food and Drug Administration approved a record nine new medicines from Pfizer's late-stage development pipeline.

One of the newly approved treatments Pfizer's launching now, Velsipity, came from the $6.7 billion acquisition of Arena Pharmaceuticals in 2022. It could generate more than $2 billion in sales by 2030 as a treatment for ulcerative colitis.

Also in 2022, Pfizer acquired Biohaven and its migraine headache drugs for $11.6 billion. The big purchase gave the company Nurtec, which is already on its way to becoming a blockbuster that could produce more than $1 billion in annual revenue.

Last year, the FDA approved Zavzpret, a drug similar to Nurtec that works as a fast-acting nasal spray and could be more popular than the original.

If we ignore Paxlovid, Comirnaty, and the negative effects of a stronger dollar, Pfizer reported total first-quarter sales that rose 11% year over year. With a lot of new drugs to sell, Pfizer expects adjusted earnings to reach a range between $2.15 and $2.35 per share this year, which is more than it needs to meet a dividend commitment currently set at $1.68 per share annually.

Reasons to remain cautious

Pfizer's biggest growth driver in the first quarter was a rare-disease treatment called Vyndaqel. This is a once-daily capsule that keeps transthyretin, a protein that transports vitamin A and thyroid hormone, from unraveling and forming life-threatening plaques in heart tissue and other organs.

There are somewhere between 5,000 and 7,000 new cases identified annually in the U.S. of cardiomyopathy caused by transthyretin amyloidosis. That was enough to drive first-quarter sales of Vyndaquel 66% higher year over year to an annualized $4.5 billion. Recent results from a still-experimental therapy, though, suggest Vyndaqel's sales growth could decelerate.

This June, Alnylam (NASDAQ: ALNY) reported successful phase 3 clinical trial results with vutrisiran, an injection given once every three months. Treatment with vutrisiran reduced patients' risk of heart attack or death from any cause by 28% for patients who were taking Pfizer's Vyndaqel.

Pfizer's top-selling cancer drug, Ibrance, is responsible for about 7% of total sales, and it's losing ground to competitors. First-quarter Ibrance sales declined by 8% year over year.

A buy now?

Big pharma companies are made up of many pieces that are constantly moving in opposite directions. Comirnaty, Paxlovid, and Ibrance are on the way down, but it looks like Pfizer has enough new products to offset the losses and continue growing earnings and its dividend payout.

Adding some shares of Pfizer to a diversified portfolio and holding them for at least a decade looks like a smart move for most investors to make right now.

Should you invest $1,000 in Pfizer right now?

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Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alnylam Pharmaceuticals and Pfizer. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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