Pfizer & Bristol Myers: 2 Dirt-Cheap Pharma Stocks Yielding 6%+ for Healthcare Investors

The pharmaceutical sector is at a crossroads: blockbuster drug franchises are about to lose exclusivity just as the Inflation Reduction Act introduces Medicare price negotiations. For healthcare systems, these trends foretell both cost savings and disruption to the innovation pipeline. Investors willing to look through the near-term noise may find that Pfizer and Bristol Myers Squibb—two giants trading at multi-year lows—offer not just income but a stake in the next wave of cell and gene therapies, ADCs, and precision medicines.

Pfizer (PFE) and Bristol Myers Squibb (BMY) have been relegated to the bargain bin of the pharmaceutical sector, trading at valuations rarely seen for companies of their size and historical earnings power. Once hailed as a $100 billion revenue giant in 2022 on the back of COVID-19 vaccine and antiviral sales, Pfizer has since faced a precipitous decline in pandemic-related revenue, dropping to approximately $58 billion in 2025. Bristol Myers Squibb, for its part, has navigated the steady erosion of exclusivity on top-selling drugs like Revlimid, with revenue contracting from $46.2 billion in 2022 to an estimated $44 billion in 2025. Both companies now offer dividend yields that tower above the S&P 500 average—Pfizer around 6.5% and Bristol Myers near 5.8% at current prices—making them the kind of dirt-cheap income plays that often attract contrarian investors.

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Pfizer generated free cash flow of approximately $12 billion in 2025, more than enough to cover its $9 billion annual dividend obligation, while Bristol Myers’s $14 billion in free cash flow supports its $5 billion dividend.

The immediate bear case is well understood. Pfizer's anticoagulant blockbuster Eliquis, co-marketed with Bristol Myers, faces a key U.S. patent expiration around 2028, putting roughly $18 billion in combined annual revenue at risk. Meanwhile, Bristol Myers must contend with its own patent cliffs on Opdivo and other franchises, with an estimated $20 billion in revenue under threat through the end of the decade. Both companies are also navigating the Inflation Reduction Act's drug price negotiation provisions, which could further compress margins on top Medicare products. The market has priced these headwinds aggressively: Pfizer shares have fallen over 50% from their 2021 pandemic highs, while Bristol Myers trades at a forward P/E below 8, suggesting deep skepticism about their ability to offset looming revenue losses.

Yet both companies are pursuing aggressive pipeline-driven turnarounds that could reshape their revenue profiles by 2030. Pfizer plans to launch 19 new molecular entities or indications within the next 18 months, targeting oncology, inflammation and immunology, and rare diseases—areas where it has historically been underrepresented. The acquisition of Seagen for $43 billion in 2023 gave Pfizer a leading position in antibody-drug conjugates, a category expected to generate $10 billion-plus in peak sales. Bristol Myers has similarly rebuilt its pipeline through acquisitions of Karuna Therapeutics (neuropsychiatry) and RayzeBio (radiopharmaceuticals), with late-stage assets like KarXT for schizophrenia offering blockbuster potential. If even a third of these pipeline bets hit, the combined revenue could more than compensate for patent cliffs.

The dividend cover metrics provide some reassurance. Pfizer generated free cash flow of approximately $12 billion in 2025, more than enough to cover its $9 billion annual dividend obligation, while Bristol Myers’s $14 billion in free cash flow supports its $5 billion dividend. Both companies have signaled that dividends remain a capital allocation priority, even as they invest heavily in R&D and bolt-on acquisitions. For income-oriented investors with a three-to-five-year time horizon, the current entry point offers a rare combination of 6%+ yields and potential capital appreciation if pipeline execution gains credibility.