Early last week we sold Pfizer across all accounts invested in our dividend growth strategy.*
We initially invested in Pfizer because it was undervalued, had an above average dividend yield, was growing its dividend, and it looked like the company was going to split itself up in an effort to unlock its value. Pfizer recently spun-off Viatris after it merged its Upjohn business with Mylan. Pfizer also divested its lower growth consumer brands. But these were not the original spin-offs and restructurings we were anticipating. The market reaction was a big yawn.
With immediate catalysts gone and no dramatic change to its fair value, we pegged Pfizer as a source of cash if or when a more attractive opportunity arose. While we waited for that opportunity, Pfizer yielded over 4% and grew its annual dividend at a compound annual growth rate of 6% since our original investment.
Recent budget concerns and price weakness has created an attractive opportunity in the defense sector. We were already buying Lockheed Martin (LMT) for the portfolio, and more recently had added a starter position to Northrup Grumman. We decided to bring Northrop Grumman (NOC) up to a full position and we used Pfizer as a source of capital to fund this recent purchase.
Our next dividend letter will discuss why we bought Northrup Grumman. Use the button below to subscribe to our email list and receive the next issue of the AMM Dividend Letter.
*Not all accounts will have a position in Pfizer (PFE). It depends on when an account joined the AMM Dividend Growth Strategy.