Philip Morris International: Developing Smokers
Philip Morris International (PM) is finally free from its parent, Altria (MO). The spin-off is complete and the new PM is off and running. This is one of my three favorite stocks (if you can guess my other two based on previous posts, you win a prize). Let’s take a further look at the company and the stock.
While the U.S. cigarette market has been in decline for years, the international market has excellent growth ahead due to the developing markets. PM, with its strong brands, is better poised than any other company to take advantage of this growth.
Reasons I Like PM
- If you’ve read anything regarding Buffett’s style, you will know he only invests in companies that can be easily understood. PM definitely falls into that category.
- Philip Morris projects mid double digit earnings growth
- Great dividend: $.46 per quarter ($1.84 annual). A payout ratio of 65%. Also, the company has a great history of dividend growth.
- A $13 billion share re-purchase program (approx 12% of market cap).
- Almost all of the litigation issues regarding cigarette use are inside the U.S. PM is now free of this burden.
- I’m very bearish on the long term view of the U.S. dollar. A weak dollar helps the company. Even with a near term bounce in the dollar, the long term outlook is bleak.
Philip Morris International is going to be a holding of mine for a long time. If you have read the previous articles on this site discussing pillar investments, this is currently my top recommendation for your pillar investments. For more information on my definition of pillar investments and a recommended portfolio structure, click here.
As a young investor, you want to build positions in the best companies. Philip Morris International has a proven history of returning value to shareholders. As you build your portfolio, this stock should be at the top of your list of potential stocks to be the pillars of your portfolio.
In the future, I will write an article revealing my trades in MO and PM, and detail the entry points I have made as I have built my position in this stock.
I will be buying more shares when possible.
Do you own Philip Morris Int’l (PM) in your portfolio? What do you like about the company? Are you attempting to add to your position? Join the discussion by adding your comment.