1 Ultra-High-Yield Healthcare Stock to Buy Hand Over Fist and 1 to Avoid

Companies with high dividend yields can seem attractive, but there is far more to income stocks than above-average yields. Any corporation's payouts are in danger without a robust business backing it up. That's why choosing the right dividend stock requires looking beyond the yield and into the company's fundamentals.

Let's illustrate that with two examples: Pfizer (NYSE: PFE), and Medical Properties Trust (NYSE: MPW). While both have attractive yields, the former is a worthy investment, but the latter, not so much. Here's why.

The high-yield stock to buy: Pfizer

The drugmaker's stock isn't popular on the market right now, with shares significantly lagging the market over the past two years. In the meantime, the stock's dividend yield rose, and as of this writing, it stands at 5.7%. Despite Pfizer's issues, the company can maintain its dividend program.

To be fair, Pfizer's financial results are relatively poor compared to what it delivered in 2021 and 2022 -- two years during which its sales skyrocketed thanks to its work in the coronavirus area. Yet, its top line inflected well above pre-pandemic levels, a very encouraging sign that points to secular growth in the business.

Pfizer's COVID-19 drugs will eventually stop affecting its results as much. Moreover, there's no letup in the company's research & development expenses (which are far higher than pre-pandemic levels) that saw operating and net income drop below pre-COVID levels.

And so there is a strong possibility that a whole lot of products are in the pipeline, which should help the company return to profitable growth. Currently, Pfizer's pipeline has over 100 programs. But two areas where the company is focusing its research efforts, and worth a special mention, are in the weight loss space and oncology.

The lucrative GLP-1 weight loss field is growing rapidly. Pfizer's candidate, oral danuglipron, recently performed well in a phase 2 study.

Then, there are the company's efforts in oncology. Pfizer acquired Seagen, an oncology specialist, for $43 billion. CEO Albert Bourla said of the acquisition: "We are not buying the golden eggs. We are acquiring the goose that is laying the golden eggs." Seagen had several approved cancer drugs and a deep pipeline, but it was a much smaller company than Pfizer, with less funding and smaller footprints in the industry. Now that they are a single entity, Pfizer should become a much more prominent player in oncology.

So, despite a poorer showing over the last year or so, the company's underlying business boasts excellent prospects. Pfizer's dividend should be safe. It has increased its payouts by 17% in the past five years. Pfizer is a reliable, high-yield dividend stock to buy and hold.