Philip Morris International Inc's Dividend Analysis
Unpacking the Sustainability of Philip Morris International Inc's Dividends
Philip Morris International Inc (NYSE:PM) recently announced a dividend of $1.3 per share, payable on 2024-04-09, with the ex-dividend date set for 2024-03-20. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Philip Morris International Inc's dividend performance and assess its sustainability.
What Does Philip Morris International Inc Do?
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Philip Morris International is an international tobacco company with a product portfolio primarily consisting of cigarettes and reduced-risk products, including heat-not-burn, vapor, and oral nicotine products, which are sold in markets outside the United States. The company diversified away from cigarettes with the 2022 acquisition of Swedish Match, a leading manufacturer of traditional oral tobacco products and nicotine pouches, primarily in the U.S. and Scandinavia. It diversified away from nicotine products with the acquisition of Vectura, a provider of innovative inhaled drug delivery solutions, in 2021.
A Glimpse at Philip Morris International Inc's Dividend History
Philip Morris International Inc has maintained a consistent dividend payment record since 2008. Dividends are currently distributed on a quarterly basis.
Philip Morris International Inc has increased its dividend each year since 2008. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 16 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Philip Morris International Inc's Dividend Yield and Growth
As of today, Philip Morris International Inc currently has a 12-month trailing dividend yield of 5.40% and a 12-month forward dividend yield of 5.47%. This suggests an expectation of increase dividend payments over the next 12 months.
Over the past three years, Philip Morris International Inc's annual dividend growth rate was 2.70%. Extended to a five-year horizon, this rate increased to 2.80% per year. And over the past decade, Philip Morris International Inc's annual dividends per share growth rate stands at 3.50%.
Based on Philip Morris International Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Philip Morris International Inc stock as of today is approximately 6.20%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-12-31, Philip Morris International Inc's dividend payout ratio is 0.90. And this may suggest that the company's dividend may not be sustainable.
Philip Morris International Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Philip Morris International Inc's profitability 8 out of 10 as of 2023-12-31, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Philip Morris International Inc's growth rank of 8 out of 10 suggests that the company 's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Philip Morris International Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Philip Morris International Inc's revenue has increased by approximately 7.10% per year on average, a rate that underperforms than approximately 50% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Philip Morris International Inc's earnings increased by approximately 1.20% per year on average, a rate that underperforms than approximately 75% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 3.10%, which underperforms than approximately 60% of global competitors.
Next Steps
In conclusion, while Philip Morris International Inc's dividend track record is commendable, the high payout ratio raises questions about sustainability. However, the company's strong profitability rank and consistent net income provide some reassurance. The growth metrics present a mixed picture with solid revenue growth but lagging EPS and EBITDA growth rates. Investors should consider these factors in conjunction with industry trends, regulatory impacts, and strategic initiatives when evaluating the future prospects of Philip Morris International Inc's dividends. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
