Dividend stocks can be tricky for investors. If you're looking to invest $1,000 and benefit from a stock that pays a dividend, you have to look past the stock's yield.
Yes, it's nice to have an above-average yield, but a company with an unsustainable dividend is no bargain. If the payout ratio is too high, there's a good chance a dividend cut is in the future, and that will likely lead to the stock's price tumbling as well, a double-whammy for investors.
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Two healthcare stocks offering above-average dividend yields, paired with valuations that appear underpriced relative to historical standards and broader industry peers, are Bristol Myers Squibb (NYSE: BMY) and Pfizer (NYSE: PFE). Their shares are up more than 23% and 14%, respectively, so far this year.
Here's why I think investing $1,000 in either of these pharmaceutical stocks makes sense for income-oriented investors.

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