Key Points

Pfizer offers a higher forward dividend yield than Bristol Myers Squibb, but the latter outperforms in most other measures.
Bristol Myers Squibb shows a stronger history of dividend growth and appears better positioned for long-term sustainability based on its payout ratio.
Since both firms encounter comparable hurdles, dividend growth and sustainability stand out as key factors in selecting the stronger income stock.

When evaluating pharmaceutical stocks for yield, Bristol Myers Squibb (NYSE: BMY) and Pfizer (NYSE: PFE) often draw attention. Choosing the better high-yield option requires weighing multiple factors beyond the headline yield figure.

Today's yield favors Pfizer. Yet questions around sustainability arise when examining payout ratios and earnings projections.

Reviewing the dividend profiles of both companies helps clarify the stronger long-term income choice.

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Dividend Comparison: Bristol Myers Squibb versus Pfizer

At present prices, Bristol Myers Squibb carries a forward dividend yield near 4.6 percent. Pfizer leads with a forward yield of 6.7 percent. The elevated Pfizer figure, unusual for a healthcare name, hints at market doubts over dividend staying power.

Examining payout ratios confirms this view. Bristol Myers Squibb maintains a payout ratio around 40 percent, inside a comfortable range. Pfizer exceeds 60 percent, placing it near the edge of long-term viability. At that level, Pfizer can cover the dividend but retains less room for debt reduction, internal expansion, or acquisitions.

Bristol Myers Squibb also leads on dividend growth. Both companies post similar streaks of annual increases, with Bristol Myers Squibb at 18 consecutive years and Pfizer at 16. Over the past ten years, however, Bristol Myers Squibb averaged 5.3 percent annual growth compared with 4.4 percent for Pfizer. Even without a cut, the yield difference between the two is likely to shrink over time.

Which Stock Ranks Higher?

Bristol Myers Squibb holds advantages in durability and growth potential, yet past results offer no guarantee of future outcomes. Short-term growth estimates for both firms look alike. Analysts project Pfizer sales to drop 1.4 percent this year and 3.8 percent in 2027, with earnings rising 8.7 percent this year before flattening next year.

For Bristol Myers Squibb, forecasts show sales declining 1.8 percent in 2026 and 2.3 percent in 2027, while earnings rise 3 percent this year and fall 2.2 percent the following year. Both companies may still beat expectations in 2026 through pipeline progress and cost controls.

Investors remain cautious. Since January, Bristol Myers Squibb shares have returned 3.2 percent and Pfizer shares 6.1 percent. Both trade near nine times forward earnings.

Given similar challenges ahead, Bristol Myers Squibb earns the edge through stronger dividend growth and sustainability metrics, making it the preferable selection.

Should You Purchase Bristol Myers Squibb Shares Today?

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Thomas Niel holds no positions in the mentioned stocks. The Motley Fool maintains positions in and recommends both Bristol Myers Squibb and Pfizer. The Motley Fool maintains a disclosure policy.

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