2 Absurdly Cheap Dividend Stocks to Buy With $1,000 Right Now
2026-09-02 16:30
•James Halley •The Motley Fool
••••• ••••• Axe Cap view
Why South African Investors Should Pass on US Pharma Dividends for Now
Bristol Myers Squibb and Pfizer look cheap in the US, but rand investors have better options locally and must watch FX risks.
The US pharma giants Bristol Myers Squibb and Pfizer are tempting with dividend yields near 4% and 6%, respectively. The catch? Pfizer’s payout ratio is pushing 90%, raising doubts about sustainability once COVID-related revenues fade. For South Africans, this story is complicated by the USD/ZAR exchange rate. The rand’s recent volatility can erode those generous dividends once converted back. Meanwhile, our local banks like Standard Bank and FirstRand still offer compelling dividends supported by solid capital buffers and a less volatile domestic revenue base. With inflation pressures moderating and credit demand steady, these banks’ dividends seem more secure than struggling global pharma firms facing patent cliffs and pipeline risks. Investors tempted by US pharma should watch the rand closely and consider trimming exposure if the currency depreciates further. If the rand strengthens sharply or your portfolio needs US dollar diversification, a small allocation might make sense, but it shouldn’t be a core holding right now. this is just our opinion and not financial advice
Avoid buying US pharma stocks like BMY and PFE given rand risk and payout concerns; instead, maintain weights in South African banks such as Standard Bank and FirstRand for steadier dividends.
- USD/ZAR
- Standard Bank
- FirstRand
- Rand appreciating sharply, improving US dividend appeal
- Unexpected pipeline successes boosting Pfizer’s outlook
7/10
Bristol Myers Squibb and Pfizer are recommended as undervalued pharmaceutical stocks offering above-average dividend yields. BMY offers a safer 3.76% yield with a sustainable 45% FCF payout ratio and growing oncology portfolio, while PFE provides a higher 6.04% yield but with a riskier 89% payout ratio. Both trade at steep discounts to peers despite facing patent expiration challenges.
Our take is based on reporting first published by The Motley Fool.