Prediction: These 2 Dividend-Paying Stocks Will Outperform the Market This Decade

Core Viewpoint - Investors are undervaluing high-yielding stocks, particularly those with strong dividend growth potential, amidst a market driven by the AI narrative and high valuations [1][2]. Group 1: Philip Morris International - Philip Morris International, a major global tobacco company, has shown strong earnings growth from its legacy brands due to stable cigarette usage in Europe and price increases [3][5]. - The company has diversified into the new-age nicotine market with products like Iqos and Zyn, attracting 36.5 million customers [4]. - Projected total shipment volumes for 2024 are expected to grow by 1% to 2%, with earnings per share (EPS) anticipated to increase by 11% to 13% [5]. - The stock currently offers a dividend yield of 4.4%, significantly higher than the S&P 500 average of 1.3%, with potential for consistent dividend growth over the next five to ten years [6]. Group 2: British American Tobacco - British American Tobacco has a high dividend yield of 8.1%, nearly double that of Philip Morris, but faces challenges with a 12.5% year-over-year decline in combustibles volume in the first half of 2024 [7][8]. - Despite volume declines, the company has managed to grow free cash flow per share to $5.30 over the last 12 months [8]. - The "new categories" segment, including oral nicotine pouches and vapor devices, is projected to reach around$5 billion in annual revenue and has recently achieved positive profitability [9]. - The company is expected to continue growing free cash flow per share over the next five to ten years, even with ongoing declines in the cigarette business [10][11].