Philip Morris (PM) Hikes Dividend: What Else Should You Know?
Some stocks are delighting investors, courtesy of impressive dividend payouts amid the coronavirus pandemic. One such stock is Philip Morris International PM, which announced a dividend hike. It will now pay a quarterly dividend of $1.20 per share, up 2.6% from the prior rate of $1.17. The hiked dividend will be paid out on Oct 13, 2020 to shareholders of record as of Sep 24.
Notably, the new rate takes up the company’s annualized dividend to $4.80 per share. Philip Morris currently has a dividend payout of 90.9%, dividend yield of 5.8% and free cash flow yield of 6.2%. With an annual free cash flow return on investment of 47.8%, significantly ahead of the industry’s 18.7%; the increased dividend is likely to be sustainable. Well, dividend payouts are one of the biggest enticements for investors and Philip Morris is committed to boosting shareholders’ wealth.
What Else Should You Know?
Philip Morris is one of the industry forerunners when it comes to developing and marketing low-risk tobacco alternatives. This helps the company stay afloat amid receding cigarette sales. In this regard, Philip Morris has been expanding its reduced risk products (RRP’s) category to help adult smokers switch from traditional cigarettes to other low-risk options
On Aug 17, Philip Morris announced plans to begin commercialization of KT&G’s smoke-free alternatives outside South Korea. According to the disclosure, the company will launch KT&G’s lil SOLID device and associated Fiit consumables in Russia. Philip Morris is also considering commercializing lil SOLID in other markets, in subsequent periods.
On Jul 7, the FDA approved a version of IQOS’s marketing as a modified risk tobacco product (MRTP). IQOS is presently the only heat-not-burn product in the U.S. market, which has been approved by the FDA. These strategic plans are expected to radically boost the business of the company.
Wrapping Up
Philip Morris is grappling with lower cigarette sales volumes stemming from anti-tobacco campaigns, stringent marketing regulatory measures and rising health consciousness. Moreover, coronavirus-induced restrictions and reduced global travel is adversely impacting duty-free sales.
Despite such crisis, the switch from smoking to RRP’s has been trending positively especially since the coronavirus outbreak. Markedly, RRP’s formed around one-fourth of the company’s total revenues in the second quarter of 2020, including about 8% contribution from IQOS devices. Heated tobacco unit shipment volumes of 18.7 billion units rose 24.3% year over year in the quarter.
Notably, shares of this Zacks Rank #3 (Hold) stock have gained 14.7% in the past three months compared with the industry’s growth of 5.5%.
Solid Staple Bets
Vector Group VGR, with a Zacks Rank #2 (Buy), has an impressive earnings surprise record. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Turning Point Brands TPB, with a Zacks Rank #2, has a trailing four-quarter earnings surprise of 19.1%, on average.
B&G Foods BGS, with a Zacks Rank #2, has a trailing four-quarter earnings surprise of 6.9%, on average.
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