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Philip Morris International Stock Analysis

Philip Morris International Inc. (PM), through its subsidiaries, manufactures and sells cigarettes and other tobacco products. Its portfolio of international and local brands include Marlboro, Merit, Parliament, Virginia Slims, L&M, Chesterfield, Bond Street, Lark, Muratti, Next, Philip Morris, and Red & White.

The company was created after the spin-off of Altria Group’s (MO) international operations in 2008. The spin-off was orchestrated in an effort to separate international operations from regulation and litigation risk in the US. Philip Morris International has managed to boost distributions in each year since the spin-off. Quarterly distributions have increased from 46 cents/share in 2008 to 77 cents/share in 2011.

The growth in earnings per share will be driven by several factors. The company expects to generate 10%- 12% annual growth in earnings through its cost reduction programs, acquiring companies internationally as well as innovating in growing markets in order to position itself favorably.
Currently, PMI is trading at 16.40 times earnings, yields 3.70% and has a sustainable dividend payment. I like the company’s high current yield as well as the potential for strong dividend growth. Phillip Morris International is already my largest position due to my bullishness for the stock as well as its strong performance. Nevertheless, I would consider adding to my position subject to availability of funds.

Full Disclosure: Long PM and MO

Relevant Articles:

Altria Group (MO): High Dividend Growth Stock
Philip Morris International versus Altria
Three Companies expecting high dividend growth and returns
Phillip Morris International Delivers Another Smoking Hot Dividend Increase

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