2 Top Dividend Stocks to Buy With Less Than $50

Key Points

• Pfizer and Bristol Myers Squibb are trading for less than $50 per share.

• Despite patent cliffs and other issues they face, both could rebound.

• Both have strong dividend programs and look attractive at current levels.

• 10 stocks we like better than Pfizer ›

Investing on a budget can still be lucrative. And even though the best stocks tend to attract plenty of attention from investors who bid up their share prices, it's possible to find quality companies trading for less than $50.

Pfizer (NYSE: PFE) and Bristol Myers Squibb (NYSE: BMY), two pharmaceutical giants, are excellent examples. These stocks aren't just affordable; they look like great value buys right now, and as a bonus, they're solid dividend payers, too. Let's dig in.

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1. Pfizer

Pfizer has had poor financial results over the past few years. Investors are also concerned that it may struggle to address upcoming patent cliffs, including that of Eliquis, an anticoagulant set to lose patent exclusivity by the end of the decade.

However, Pfizer's latest financial results showed significant progress. Revenue increased by 10% year over year to $14.7 billion. Partly thanks to solid top-line growth and Pfizer's ongoing cost-cutting efforts, the company's adjusted (non-GAAP) net earnings per share (EPS) grew by 30% year over year to $0.78.

Image source: Getty Images.

Pfizer's coronavirus portfolio performed well during the period. But beyond this somewhat unpredictable franchise, the drugmaker has earned several brand-new approvals in the past few years. Although they aren't yet making massive contributions to its results, some are due for label expansions -- and some have recently won new indications.

Pfizer's vaccine for the respiratory syncytial virus (RSV), Abrysvo, is now approved for adults age 18 to 59, after first securing an indication for older adults of 60 and above.

The company should continue to innovate, thanks to its deep pipeline of investigational products, particularly in oncology. Pfizer plans to have eight oncology blockbusters in its portfolio by the end of 2030, compared to its current five.

Can the drugmaker achieve this goal? Pfizer has been enhancing its pipeline through acquisitions and licensing deals, with many of the over 100 clinical programs focusing on novel compounds. It should, eventually, earn significant clinical and regulatory wins.

The company continues to increase its payouts, having done so by 19.5% over the past five years. Pfizer's forward yield is now a juicy 6.9%.

And its recent forward price-to-earnings (P/E) ratio of 8.1 appears significantly more attractive than the healthcare industry average of 16.6. At current levels, Pfizer appears attractive to long-term investors; they could purchase two of its shares for $50, leaving a little spare change.

2. Bristol Myers Squibb

Bristol Myers Squibb has faced similar problems. Its financial results haven't been strong due to patent cliffs; it will have to deal with more of those in the future, including one for Eliquis, which BMS co-markets with Pfizer. In the second quarter, revenue increased by just 1% year over year to $12.3 billion. Adjusted EPS decreased by 29% year over year to $1.46, primarily due to charges related to a partnership it signed with BioNTech.

Not much to worry about there. The question is whether BMS can improve top-line growth.

Thankfully, the new product portfolio is performing well. Medicines approved relatively recently include Reblozyl for anemia in beta-thalassemia patients, which received approval in 2019, and cancer medicines Breyanzi and Opdualag, approved in 2021 and 2022, respectively. Reblozyl's sales for the year are already more than $1 billion, while the two others are on track to reach that goal by year-end.

And they're far from having peaked since they haven't been on the market for that long. By the time Eliquis loses exclusivity, these and other products will be better positioned to mitigate the losses. Meanwhile, BMS recently launched a subcutaneous version of its older cancer medicine Opdivo, which will help extend its patent life. The drugmaker also has a deep pipeline with numerous ongoing clinical programs.

Finally, its dividend profile looks solid, with a current forward yield of 5.3%. The company has increased its payouts by 37.8% in the past five years.

Bristol Myers Squibb's forward P/E of around 7 also looks dirt cheap. The stock might take some time to recover, but it could deliver excellent results over the long run to investors who initiate positions today. Shares are changing hands for just under $48 apiece, so $50 is good for one of them.

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Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bristol Myers Squibb and Pfizer. The Motley Fool recommends BioNTech Se. The Motley Fool has a disclosure policy.