Pharmaceutical giant Pfizer (NYSE:PFE) has recently reported its quarterly results which showed that the New York- based company, which has been consistently giving cash dividends for more than 300 quarters, is well positioned to reward shareholders with higher dividends in the future.

For the first three months of this year, Pfizer reported a 26.9% increase in profits from a year earlier to $3.02 billion, or $0.49 per share. Revenues rose 19.7% to $13 billion. Excluding the impact of one-off items such as restructuring charges, earnings increased 31.4% to $0.67 per share. This was better than analysts’ consensus estimate of earnings of $0.55 per share from revenues of $12.02 billion, according to data from Thomson Reuters. Although revenue and earnings beat would please investors, that’s just the tip of the iceberg. The strong performance actually showed the strength of Pfizer’s underlying business.

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Pfizer, unlike other pharmaceutical companies, has the benefit of having a diverse portfolio of products which makes it more akin to consumer goods giants like Nestle SA (OTC:NSRGY),Procter & Gamble (P&G) (NYSE:PG) and Unilever (NYSE:UL). As I wrote previously, the company’s blockbuster drugs that are well known all over the world, such as Lipitor, Lyrica, Prevnar, Sutent and Viagra, account for just 40% of its annual sales. Less than a third comes from drugs that generate under $1 billion in annual revenues while one-fifth of sales are attributed to hundreds of products that most shareholders don’t even know about since they are too small to be individually listed in the annual report. But what we saw in the first quarter was that this portfolio, which consists of both mature and new drugs, continues to drive Pfizer’s growth.

In the first quarter, Pfizer’s revenue growth was driven partly by the $17 billion acquisition of Hospira – a maker of injectable drugs, a variety of biosimilars and infusion technologies - which closed eight months ago. In addition to this, the previous quarter also included additional selling days - five in the US and four in international markets. But if we exclude the positive impact of Hospira, related foreign exchange effects, and additional selling days, revenues were still up by roughly $800 million, as per my rough calculations. Now that may not sound much for a company that makes more than $10 billion in quarterly sales, however, that is still great for Pfizer which has a large portfolio of older products which generally register modest growth, at best.

The revenue growth was driven by both mature and new products, which shows that Pfizer, as a stand-alone company, is doing great. When it comes to mature drugs, Lipitor, for instance, which was once the company’s megablockbuster product but lost its patent in 2011, witnessed 3% operational growth in worldwide sales to $411 million. Similarly, the kidney cancer drug Sutent and pain drug Lyrica also reported decent performance.

As for the new drugs, I was particularly interested in hearing the sales numbers of breast cancer drug Ibrance, which is a blockbuster in the making and is expected to generate $3.2 billion in annual sales in 2017, up from $720 million last year. And Ibrance delivered a blowout performance, growing sales from just $38 million in the first quarter of last year to $429 million.

It appears Ibrance is well on track to achieve the sales target. Meanwhile, the Prevnar vaccine continued to impress with another strong performance, posting operational growth of 19% from a year earlier to more than $1.5 billion. The rheumatoid arthritis drug Xeljanz, launched less than four years ago in the US, managed to more than double sales to $197 million.

This sets up Pfizer well to post revenue growth in the current year – that’s something which it has been unable to do for the last few years. The company is also confident about its ability to post top-line growth and has increased the current year’s guidance. The company expects to achieve revenues of between $51 billion and $53 billion in the current up, as opposed to its previous guidance of between $49 billion and $51 billion.

The adjusted earnings guidance has also been increased from previous guidance of $2.20 to $2.30 per share to a range of $2.38 to $2.48 per share. The new guidance implies revenue growth of 6.4% and earnings growth of 10.5% at the midpoint from last year. This will likely be accompanied by cash flow growth. An increase in cash flows would justify an increase in dividends. The stock currently yields 3.6%.

In addition to this, there are two major catalysts at work that could push Pfizer stock higher in the coming months. Firstly, Pfizer has also said that it will make a decision this year regarding a possible sale or a split of its established products division. The company has been mulling over dividing itself into two parts – one focusing on the fast growing innovative products while the other focusing on mature drugs – in order to unlock the hidden value of the former unit.

But it put the decision on the back burner as it worked on shifting its domicile to Ireland by merging with the Botox maker Allergan (NYSE:AGN). But the US government’s tightening of rules around inversion deals killed the merger. Consequently, the potential sale of a unit or split of the company is back in the spotlight. Pfizer expects to make a final decision by the end of this year. I believe a sale or split decision can have a positive impact on Pfizer stock.

Secondly, in a recent interview, Pfizer’s management stressed that despite the Allergan setback, the company continues to look for other M&A opportunities. I believe Pfizer is unlikely to go after another inversion deal, but we can say with a fair amount of certainty that acquisitions will remain a key growth driver. Following two major M&A setbacks, with Allergan in the current year and Astrazeneca (NYSE:AZN) in 2014, I do not see Pfizer attempting another major acquisition, especially now when it is focusing on selling the established products unit or splitting the company into two.

Rather the company could make a relatively small acquisition of under $10 billion, most likely in the biotech space. According to a recent media report, the pharmaceutical giant is eyeing the cancer drug maker Medivation (NSDQ:MDVN). The San Francisco based company, with an enterprise value of $9.6 billion, has recently rejected French drug maker Sanofi's (NYSE:SNY) $9.3 billion bid. I believe an accretive acquisition can lift Pfizer stock.

Conclusion

Pfizer’s quarterly results came in ahead of estimates. But more importantly, the results show the strength of Pfizer’s underlying business, with growth in some key mature drugs as well as new medicines. The company is positioned to grow revenues, earnings and cash flows this year, which should support dividend growth as well. Moreover, the decision around sale or split of the established medicines business into a new company and an accretive acquisition can have a positive impact on Pfizer stock in the near term. Therefore, I expect Pfizer stock to continue moving higher.