Philip Morris International (PM) is the independent company that was previously spun off from Altria Group (MO) which was the parent company of Philip Morris International and Philip Morris USA (PM USA is still under Altria). Management decided to spin off PM as a separate entity to unlock potential share holder value. The stock has been a winner since with a nice dividend yield as well as good share price appreciation.
Like most stocks in the dividend portfolio, PM is a defensive stock that will perform well in a struggling economy and also is a weak dollar play. As the dollar falls against other currencies, PM will see the benefits in higher revenue (in dollars). One of the reasons why PM is up a lot in recent years and months is because of the dollar weakness against the Euro (Europe is a major market for PM).
If you recall when the European debt crisis flared up, the dollar soared against the Euro and stocks like PM were pummeled. This is an important lesson to learn because you can take advantage of these short term currency moves and pick up shares of a great company like Philip Morris Int’l at attractive rates. The great thing is that the European debt crisis is almost absolutely going to flare up again (whether it is driven by Greece, Spain, etc.) and a similar currency would could take place. Watch this closely and use it to add to your position in PM.
Philip Morris sells cigarettes around the world with Europe being a major market (although declining market). The emerging markets like Asia represent real growth. The amazing thing about a cigarette company is that they are able to maintain revenues by raising prices when societies crack down on smoking as much of the developed world has done.
PM has more debt that I like, but they seem confident in the ability to manage the global debt markets and return cash to shareholders via dividends and buybacks.
I want to buy PM shares under $53 / share. At under $45 / share, you back up the truck. Yield should continue to rise on this company and your long-term return should be stellar assuming you buy at quality entry points.
Read more on PM
- Dividend Stocks Update
- Allow Europe To Shake The Markets Out, Then Add To Positions
- Market Update Aug 19, 2011
- Stocks Take Major Hit, Buying Opportunities Getting Closer
- Philip Morris Delivers Great Q2 Results
- Dividends Offer Decent Protection Against Inflation
- Thoughts On Buying Back Shares
- Europe Implosion Should Offer Buying Opportunity For Philip Morris
- Initial Dividend Portfolio