Better Dividend Stock: Ford vs. Pfizer

Dividend stocks can be a good strategy for investors seeking a reliable and potentially more predictable stream of passive income. Two companies with high dividend yields are the longtime automaker Ford Motor Company (NYSE: F) and the large pharmaceutical company Pfizer (NYSE: PFE). Ford's trailing-12-month dividend yield is over 4.5%, while Pfizer's yield is roughly 6.9%.

However, high dividend yields are often high for a specific reason. The key is to ensure that companies can cover their dividend payments and also have room to increase their dividends. Which is the better dividend stock: Ford or Pfizer?

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Ford: A shaky dividend that looks sustainable for now

One key factor to consider when evaluating dividend companies is their ability to consistently pay and raise their dividend over time. Ford has been somewhat inconsistent in this regard, having had to cut its dividend during the Great Recession and again in 2020 at the onset of the pandemic. Otherwise, the company has paid dividends throughout this period and even issued special dividends, such as in 2023, which appear to have compensated for the missed dividends in 2020 and 2021.

Ford has faced numerous challenges this year, including President Donald Trump's tariffs and a fire at one of its major suppliers, which has impacted the company's profits. In the first three quarters of 2025, Ford has paid out about $2.4 billion in dividends, while generating about $2.8 billion in profits. Profits are down significantly year over year due to some of the headwinds mentioned above.

However, the company has generated adjusted free cash flow of $5.7 billion. Plus, Ford is guiding for another $2 billion to $3 billion of free cash flow in the final quarter of the year and for full-year adjusted EBIT (earnings before interest and taxes) of $6 billion to $6.5 billion. Ford should also get some relief next year from relaxed tariffs impacting automakers and as the company pivots away from wide-scale electric vehicle production to focus more on profitable hybrid vehicles.

Pfizer: Struggling free cash flows expected to improve

Pfizer has been on a more uncertain path since peaking during the COVID-19 pandemic, when the company proved to be one of the major providers of vaccines that helped reopen the economy. However, since then, the stock has struggled as investors wrestle with expiring patents and a robust pipeline of drugs that the company has acquired through large acquisitions.

Pfizer is an interesting dividend company. It has paid dividends for 87 straight years, but it hasn't always increased its dividend during all of these years. In the first nine months of 2025, Pfizer has paid roughly $7.3 billion in dividends, while generating $9.4 billion of net income. However, I estimate free cash flow at about $4.6 billion so far through the year.

The company recently issued guidance for 2026 that came in below analyst estimates. Management partly attributed the subdued guidance to lower revenue from the COVID-19 vaccine and Paxlovid, its antiviral pill.

Still, management on the company's most recent earnings call said it expects to "generate robust cash flow from operations in '26," and is also focused on maintaining and growing the dividend. Analysts are also forecasting much higher free cash flows over the next two years, according to estimates provided by Visible Alpha.

Which is the better dividend stock?

As dividend stocks, both Ford and Pfizer have pros and cons. Pfizer has been paying its dividend for a longer period, but Ford will occasionally offer special dividends. Ford's profits so far this year have struggled to cover the dividend, while Pfizer's free cash flow has failed to cover its dividend. Meanwhile, the financial picture appears to be improving at Ford, and Pfizer also appears poised to grow free cash flow, although its forward guidance left much to be desired.

Ultimately, both companies should be able to cover their respective dividends in the near future; however, neither is a guarantee for the long term. I'd give a slight edge to Pfizer right now, given its track record, management's clear commitment to the dividend, and the higher yield, which better compensates investors for the risk.

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Pfizer. The Motley Fool has a disclosure policy.