2 High-Yield Dividend Stocks Too Cheap to Ignore

What's even better than a solid, reliable dividend stock? A solid, reliable, high-yield dividend stock. One that is trading at attractive levels is even more preferable. Excellent dividend payers tend to garner significant attention and often command steep premiums.

However, today let's consider two that the market has neglected due to issues they have encountered but could overcome: Pfizer (NYSE: PFE) and Bristol Myers Squibb (NYSE: BMY). These two drugmakers are great picks for value and income-seeking investors right now.

1. Pfizer

Pfizer's financial results have been unimpressive and somewhat unpredictable since 2023. And to make matters worse, the company will deal with some patent cliffs in the next few years.

However, the drugmaker has taken the necessary steps to address these issues. Pfizer launched newer products whose sales are slowly ramping up and should continue moving in the right direction with label expansions. Pfizer also has a deep pipeline, partly extended thanks to a series of acquisitions.

The company's work in oncology looks particularly promising. It has over 50 ongoing cancer-related clinical trials, at least some of which should lead to new products that will bolster its lineup and improve its results. Pfizer has also bagged an attractive mid-stage asset in one of the fastest-growing therapeutic areas in the pharmaceutical industry: weight management.

While it will take a little bit more time, Pfizer should succeed in overcoming its challenges. And by the end of the decade, it should have a transformed pipeline while looking at patent cliffs in the rearview mirror.

Furthermore, Pfizer has taken a significant step to address another potential risk: tariffs. It signed a deal with the White House that will allow it to be exempt from tariffs for three years. In exchange, the drugmaker will have to boost its manufacturing footprints in the U.S. while also offering some medicines at a reduced price -- a reasonable price to pay to avoid tariffs.

Lastly, Pfizer's dividend program looks strong. Recent woes have pushed the stock price down while pulling its forward dividend yield up to a massive 7%, miles ahead of the meager 1.2% average for the S&P 500. Pfizer regularly raises its dividend and has done so by 62% in the past decade.

All these factors make Pfizer stock attractive, especially as it is trading at just 8.7 times forward earnings (the average for the healthcare industry is 17). Pfizer isn't the stock to buy to earn monster returns in the next year, but the stock is well-positioned to bounce back from its challenges and perform well in the next decade.

2. Bristol Myers Squibb

Bristol Myers is facing similar issues. The company has dealt with patent cliffs in recent years and has since seen its financial results worsen. And what's more, the drugmaker will soon face further patent exclusivity losses for some of its products, including its cancer medicine, Opdivo.

However, Bristol Myers has made progress in addressing its problems. While awaiting the Opdivo-related dip in sales due to biosimilar competition, the company has earned approvals in the U.S and Europe for a new, subcutaneous formulation of the medicine, called Opdivo Qvantig.

This new version has significant advantages (faster administration time, etc.) while demonstrating similar efficacy as the old formulation. Opdivo Qvantig should attract many patients who would have otherwise chosen the old version across the various indications for which it is eligible.

Bristol Myers has also earned several new approvals since 2019. Some of these newer products are already in blockbuster territory. That includes Reblozyl, a medicine for anemia in beta-thalassemia patients. And just like every leading drugmaker worth its salt, Bristol Myers should succeed in launching even more new products given its large pipeline that boasts dozens of programs.

The stock is trading at 7.5 times forward earnings, and its forward yield is 5.7%. Bristol Myers has increased its dividend by 63.2% in the past 10 years. The pharmaceutical giant looks like a great buy right now.

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 has a disclosure policy.