Pfizer vs AbbVie: What's the Better Dividend Stock for Investors in 2026?

AbbVie (NYSE: ABBV) and Pfizer (NYSE: PFE) are two top healthcare stocks that pay above-average dividends. Both may be compelling options for investors to consider.

AbbVie pays a more modest yield, but it has been increasing its dividend at a high rate in recent years. Pfizer, meanwhile, pays a much higher amount and can be attractive to investors who don't want to wait a long time before they start generating a lot in dividends. Which one is the better option right now?

The case for AbbVie

AbbVie offers investors a well-rounded pharmaceutical stock that has some enticing growth opportunities in immunology, oncology, neuroscience, and other segments. While the temptation may be to focus on yield and dividend growth, investors shouldn't underestimate the importance of having strong financials.

Unlike Pfizer, which is in the midst of a turnaround and investing in more growth opportunities, AbbVie's business is in much stronger shape. It's growing well, posting more than 10% growth in its most recent quarterly results (which went up until the end of June). This is important as, from a risk standpoint, it means that there aren't pressing financial concerns that will impact its ability to pay dividends.

AbbVie's payout ratio may look concerning at more than 100%, but with acquisition-related expenses impacting its bottom line, that metric is not useful when assessing the health of its payout. Instead, by looking at the massive $18.2 billion in free cash flow the business has generated over the past four quarters, investors should feel confident about AbbVie's ability to pay its dividend, which has cost the company around $12 billion over that same time frame.

The stock's current yield may look underwhelming at 2.8%, but AbbVie has also tripled its payout over the past decade. With more growth on the horizon, investors who buy the stock and hang on are likely to see their dividend income rise sharply in the future.

The case for Pfizer

Pfizer's stock yields 6.4% right out of the gate, without the need to wait for dividend growth that may take years to produce significant dividend income. AbbVie would need to more than double its dividend to catch up to Pfizer, which could take several years depending on how strong its growth is.

The counterpoint is that Pfizer is a riskier stock. And while it's true that the business is facing challenges, the risks may also be overblown. The healthcare company has been loading up on acquisitions in recent years in anticipation of patent cliffs and the need to grow its operations. In its second-quarter results, which also went up until the end of June, it reported 18% operational revenue growth from among its launched and acquired products. It also has a strong pipeline with many key readouts coming over the year ahead -- more growth catalysts could be on the horizon.

While Pfizer incurred a net loss in its most recent period, there was a lot of noise in its financials due to restructuring, and its adjusted income totaled $4.4 billion, roughly the same as a year ago; the business isn't in a dire situation by any stretch.

Which dividend stock is the best option may depend on an investor's risk tolerance

There are compelling cases to invest in both of these dividend stocks, but the decision may come down to risk tolerance.

For risk-averse investors, the decision is easy: AbbVie. Its financials are solid, the business is growing, and there aren't huge concerns about its dividend. The biggest knock is that its yield is far lower than Pfizer's.

For investors who are willing to take on risk, Pfizer may be the more intriguing option due to its higher yield. But at the same time, it may still be a bit too risky if the focus is on dividend income, because if it needs to free up cash to pursue acquisitions, the company may feel compelled to slash the payout. Pfizer may be best suited for investors who are comfortable taking a chance on a beaten-down stock that also pays dividends, but for those who are primarily seeking a safe, high-yielding payout, AbbVie may be the best all-around option.

David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie and Pfizer. The Motley Fool has a disclosure policy.