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Philip Morris Ups Dividend by 10.6%

Zacks Equity Research

Tobacco manufacturer, Philip Morris International (PM), recently raised its regular quarterly dividend by 10.6% further boosting shareholder value. The company will now pay 94 cents per share every quarter, amounting to an annualized rate of $3.76 per share. The new dividend yield was 4.34% on an annual basis as of the current price of $86.56 on Sep 11, 2013.

The first increased quarterly dividend is payable on Oct 11, 2013, to stockholders of record as of Sep 26, 2013.

This was the sixth annual increase in quarterly dividends by Philip Morris after its spin-off from Altria Group Inc. (MO). The last dividend hike – by 10.4% to 85 cents per share – was made in Sep 2012. The previous four dividend increases were 17.4%, 7.4%, 20.3% and 10.4% in 2008, 2009, 2010 and 2011, respectively.

Another cigarette company, Altria (MO), also raised its regular quarterly dividend in late-Aug 2013 by 9.1% to 48 cents per share, payable on Oct 10, 2013 to shareholders as of Sep 16, 2013. The new raise brings the annualized dividend rate of Altria to $1.92 per share. Last year, Altria raised its dividend by 7.3%.

Philip Morris’ management continues to enhance shareholders’ value through share repurchases and dividends. The company’s free cash flow increased at a compound average rate of 15.3% from $4.5 billion in 2007 to $8.4 billion in 2012 which was used to return value to shareholders. Since 2008, Philip Morris has returned $59.1 billion to its shareholders -- $27.9 billion through share repurchases and $24 billion as dividends. 

In Jul 2013, Philip Morris which carries a Zacks Rank #4 (Sell) reported adjusted second-quarter 2013 earnings which missed the Zacks Consensus Estimate and the prior-year quarter earnings due to lower sales, lower industry volume, and higher cost. Despite soft performance in the first half, the company retained its earnings growth outlook for the year, signaling that the second half could be better.

Headquartered in the New York City, Philip Morris manufactures and markets cigarettes outside the U.S. in approximately 180 countries. It currently carries a Zacks Rank #4 (Sell).

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