After the poor quarterly earnings reported this week, the question is still very much on the table. You may recall that Pfizer’s dividend offers a yield of about 6 percent, an attractive amount that may be in danger due to the soon-to-expire Lipitor patents. To maintain the payout, some Wall Streeters speculate that Pfizer may have to repatriate off-shore cash, driving up its tax rate.

Why? Lipitor contributed 65 percent of Pfizer’s free cash flow last year. This is an issue, because the dividend can only be paid from US funds. As Credit Suisse analyst Catherine Arnold has noted previously, repatriation rules prohibit the transfer of offshore earnings to the US without generating a tax liability. And as Lipitor patents begin to expire in 2010, cash flow starts to shrink - to less than 30 percent in 2011, for instance.

Of course, Pfizer faces several problems - uncertainty about achieving 2008 earnings, higher-than-expected expenses in the first quarter and Lipitor revenues that were unexpectedly lower than forecast.

“These shortfalls illustrate the challenge in finding US cash flow to pay Pfizer’s dividend, the primary attraction to Pfizer stock,” Arnold writes in an investor note today. “First quarter results imply higher risk that Pfizer will face a choice between reducing the dividend, or partially funding it through debt and/or cash repatriation, which would reduce earnings per share. Tax planning was a proposed strategy to overcome the ’sources of cash’ issue, but we know this takes many years to meaningfully impact results.”