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In a Motley Fool comparison dated October 4, 2026, the traditional earnings payout ratio favored Novo Nordisk over Pfizer—but a cash-dividend payout comparison pointed the other way. The figures in that article are a dated snapshot, and neither ratio alone proves a dividend is safe.
What the comparison says—and what it does not
Motley Fool contributor Reuben Gregg Brewer reports dividend yields of 6% for Pfizer and 4.7% for Novo Nordisk, alongside earnings payout ratios of 220% and 33%, respectively. On those conventional earnings-based figures, Novo Nordisk looks stronger: its reported payout ratio is much lower, while Pfizer’s exceeds its reported earnings.
But the same article reports cash-dividend payout ratios of roughly 90% for Pfizer and 110% for Novo Nordisk. That comparison reverses the apparent advantage: on those reported figures, Pfizer’s dividend consumed a smaller share of the cash-flow measure used. The article does not clearly establish the calculation date, exact inputs, or period for every ratio, so these should be read as its reported comparisons—not as freshly verified calculations. Motley Fool’s comparison
Why earnings and cash-flow payout ratios can disagree
Earnings payout ratio
An earnings payout ratio compares dividends with net income over a stated period. A low percentage can suggest that reported earnings provide substantial coverage, while a ratio above 100% means dividends exceed earnings for that period. It does not necessarily mean the company cannot pay the dividend: earnings can be affected by non-cash charges and other accounting items, and companies may draw on cash or financing. But a persistently high ratio can be a warning that the distribution is not supported by earnings.
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Cash-dividend payout ratio
A cash-based comparison typically relates cash dividends paid to a cash-flow measure, often operating cash flow or free cash flow. The denominator matters. Operating cash flow is before capital spending; free cash flow generally reflects capital spending as well. A ratio above 100% means dividends exceeded the chosen cash-flow measure for the period, not that the company necessarily ran out of cash. The company may have used existing cash, borrowed, or had other cash movements.
Because the Motley Fool article’s exact inputs and period are not established here, its reported ratios should not be combined with company figures below as though they were calculated on the same basis. The useful takeaway is the disagreement between measures: earnings payout alone does not settle dividend coverage.
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What the companies reported for 2025
Company-reported annual figures provide context, but they are not a substitute for reconciling the article’s ratios. Novo Nordisk’s annual report lists a 2025 total dividend of DKK 11.70 per share, a 50.7% dividend payout ratio, and free cash flow of DKK 28.3 billion. The company’s own payout-ratio definition should be used; it is not automatically equivalent to a cash-flow payout ratio. Its free-cash-flow presentation also needs context when compared with the prior year, which was affected by a substantial acquisition. Novo Nordisk 2025 Annual Report and Novo Nordisk’s 2025 AGM announcement
For 2025, Pfizer reported revenue of $62.579 billion, net cash provided by operating activities of $11.704 billion, and cash dividends paid of $9.771 billion. These figures show the scale of the annual cash dividend relative to operating cash generation, but they do not independently reproduce the Motley Fool article’s roughly 90% cash-payout figure. Nor do annual totals alone reveal future coverage. Pfizer annual reports
Yield is not a measure of dividend safety
The 6% Pfizer yield and 4.7% Novo Nordisk yield are figures reported in the Motley Fool article dated October 4, 2026—not fixed characteristics of either stock. Yield changes when the share price changes and can also change when a company declares a different dividend. A high yield may look attractive, but it can also reflect investor concern about the company’s prospects or the sustainability of its payout.
For a dividend investor, the relevant question is not simply which yield is higher. It is whether the business can generate enough cash over time after funding operations, investment, debt obligations, and other priorities. That assessment requires consistent periods and definitions, plus attention to business risks.
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The businesses face different risks
Brewer’s article characterizes Novo Nordisk as more concentrated in its core drug categories and as shifting toward volume, while describing Pfizer as having a broader portfolio but facing patent expirations and the challenge of replacing revenue through its pipeline. These are the article author’s qualitative assessments, not a current independent review of product, patent, or pipeline developments. The article’s discussion of the companies
Those risk profiles complicate any simple ranking. A broader portfolio can spread exposure across products, but it does not eliminate the risk that important products lose exclusivity or new candidates fail to replace them. A more concentrated business can benefit strongly when its key categories perform well, but is more exposed to changes in competition, demand, or execution in those areas.
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How to use the comparison as an investor
- Keep the measures separate. Compare earnings payouts with earnings for the same period, and cash dividends with a clearly defined cash-flow measure for that same period.
- Check the time frame. A single year can be distorted by unusual earnings items, investment, acquisitions, or working-capital changes.
- Look beyond the dividend line. Consider capital spending, debt, other cash uses, and the company’s ability to sustain or grow its underlying business.
- Treat yield as a moving snapshot. The quoted yields belong to the article’s October 4, 2026 comparison and can change with market prices or dividend declarations.
- Separate data from judgment. The article’s conclusion that Pfizer’s higher yield may be more attractive after weighing the risks is the author’s interpretation, not an independently verified investment recommendation.
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