Comparing No. One: Pfizer -- To No. Two: Merck | More Analysis

Do your own diligence -- but this is worthy of review, over at Investopedia, this morning:

. . . .Healthier Than You Think

While Lipitor's patent expiry is a significant event for Pfizer, it's likely that has already been factored into today's stock price of $17. At the current price, Pfizer shares trade for under 8 times forward earnings estimates. This P/E is at a significant discount to the industry average. Rivals such as Merck and Novarits are trading for 10 times forward earnings. . . .

Pfizer generates over $15 billion in operating cash flow annually, while dividend payments and capital expenditures per year are less than half of that. So even with the debt assumed to buyout Wyeth, Pfizer has plenty of excess cash.

A Changing of the Guard

That excess cash may now finally find its way to shareholders. Earlier this month, Pfizer announced that CEO Jeff Kindler was being replaced by Ian Read, a 32-year Pfizer veteran. Under Read, the hope is that the company's cash will lead to more significant share buybacks and increased dividend payouts. In 2010, Pfizer bought back just over $1 billion in shares, an incredibly modest amount based on the resources available to the company. Further, the company's annual dividend of 72 cents could easily be increased to give the company a yield above 5%. That would give Pfizer one of the highest dividend yields in the industry next to Eli Lilly, which currently yields nearly 6%. . . .

Indeed.