Over the past 10 years Philip Morris International Inc (NYSE:PM) has returned an average of 4.00% per year from dividend payouts. The company is currently worth US$167.72B, and now yields roughly 4.00%. Let’s dig deeper into whether Philip Morris International should have a place in your portfolio. View our latest analysis for Philip Morris International
5 questions to ask before buying a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Does it pay an annual yield higher than 75% of dividend payers?
- Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
- Has dividend per share amount increased over the past?
- Does earnings amply cover its dividend payments?
- Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How well does Philip Morris International fit our criteria?
Philip Morris International has a trailing twelve-month payout ratio of 108.78%, which means that the dividend is not well-covered by its earnings. However, going forward, analysts expect PM’s payout to fall into a more sustainable range of 75.03% of its earnings, which leads to a dividend yield of 4.31%. Furthermore, EPS should increase to $5.28, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. PM has increased its DPS from $1.84 to $4.28 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock. Relative to peers, Philip Morris International has a yield of 4.00%, which is on the low-side for Tobacco stocks.
With this in mind, I definitely rank Philip Morris International as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Below, I’ve compiled three relevant aspects you should look at:
- Future Outlook: What are well-informed industry analysts predicting for PM’s future growth? Take a look at our free research report of analyst consensus for PM’s outlook.
- Valuation: What is PM worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether PM is currently mispriced by the market.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.