Pfizer's Dividend Yield is 10X Bigger Than Eli Lilly's. Does That Make It the Better Stock for Income Investors?

Eli Lilly (LLY 1.16%) is basically hitting it out of the park right now. Sales of its industry-leading GLP-1 weight-loss drugs Mounjaro and Zepbound rose 125% and 80%, respectively, in the first quarter of 2026, driving a huge 56% sales gain for the drug giant. There's a reason why the stock is up more than 400% over the past five years.

There's just one small problem for dividend investors: Eli Lilly's dividend yield is a tiny 0.6%. That's well below the S&P 500 index's (^GSPC +1.08%) roughly 1% yield and the average drug stock's 1.6%. Eli Lilly competitor Pfizer (PFE 2.57%) has a 6.6% yield, which is more than 10x higher! Is it the better dividend stock?

What's wrong with Pfizer?

While Eli Lilly is hitting on all cylinders today, Pfizer is not. That's why the pharmaceutical giant's stock is down 30% over the past five years and nearly 60% from the high it reached in late 2021. There are a couple of problems worth noting.

First, Pfizer was one of the companies that quickly created a COVID vaccine during the coronavirus pandemic. Sales of COVID vaccines haven't lived up to expectations now that the world has basically learned to live with the illness. In addition, Pfizer has a number of highly profitable drugs set to lose patent protection over the next couple of years. Oncology drug Ibrance will lose patent protection in 2027, with cardiovascular drugs Eliquis and Vyndaqel getting hit the following year.

As if that wasn't enough, Pfizer got a high-profile black eye in 2025 when it was forced to stop research on the GLP-1 drug it was developing. So not only is the company facing headwinds, but it is falling behind in the GLP-1 weight-loss niche that has Wall Street excited about Eli Lilly.

There's nothing unusual going on with Pfizer

While the list of negatives about Pfizer today is long, the truth is it isn't really facing any unusual problems. These are just the normal dynamics of the drug sector. Sure, Pfizer is dealing with a lot of problems all at once, but the over 100-year-old company has successfully navigated headwinds before. It is highly likely to do the same this time around, as well.

Notably, it didn't just give up on GLP-1 drugs. It quickly reset, buying a company with a more attractive drug candidate. And it has other drugs in the pipeline, focused on things like migraines and oncology, among other indications. In 2026 alone, it has 20 major studies evaluating new drug candidates.

Research and development success doesn't always align neatly with patent expirations. Given enough time, Pfizer is likely to get back on the growth track again. In the meantime, long-term, income-focused investors can collect that fat 6.6% yield. The only problem is that the payout ratio is over 100%, which is a worrying sign.

On that front, the company is openly stating that supporting the dividend is a key goal, which it can achieve by tapping other sources of cash, such as the debt market or its own bank accounts. It isn't unusual for companies to do that when they are facing temporary headwinds.

Pfizer isn't for the risk-averse, but it shouldn't be ignored

At the end of the day, Pfizer comes with risks. However, they aren't unusual risks. While a risk-averse income investor may decide to take a pass, those willing to accept a little near-term uncertainty should probably take a closer look. Buying a hot stock like Eli Lilly isn't going to get you much dividend income. Taking on a little risk with Pfizer could reward you with a huge income stream and the potential for capital gains when it works through the normal industry headwinds it currently faces.