Philip Morris' Stock Is Going Up, So Will Its Dividend

Core Viewpoint - Philip Morris is experiencing a significant stock price increase, which reflects the market's recognition of its growth initiatives, making it an attractive option for dividend growth investors [2][14]. Stock Performance - Since mid-April, Philip Morris' stock has risen from approximately $89 to nearly its all-time high of $122, indicating strong upward momentum [4]. - Over the past five years, the stock has appreciated by 48%, averaging an annual growth rate of 8.2%, combined with a dividend yield of about 5%, resulting in a total average annual shareholder return of 13.2% [5]. Dividend Growth - Philip Morris has consistently paid and increased its quarterly dividend since its spin-off from Altria in 2008, although recent annual increases have been modest, averaging 2-4% [6][10]. - The company is expected to raise its dividend again in September, with a potential new quarterly dividend of $1.35, reflecting a payout ratio of 85%, which is one of the lowest in five years [11][14]. Earnings Growth - The company is projected to achieve double-digit earnings per share (EPS) growth this year, with a second-quarter adjusted diluted EPS growth of 10.6% [9]. - Full-year EPS growth guidance has been raised from 9-11% to 11-13%, indicating a positive outlook for profitability [11]. Competitive Position - Philip Morris is leading in innovation and growth in new product categories, particularly in the smoke-free segment, where products like IQOS and ZYN are performing well [9][13]. - The company faces competition from larger players like British American Tobacco and Japan Tobacco, which have lower price-to-earnings ratios and higher dividend yields [13]. Conclusion - Philip Morris is positioned for continued growth with a strong dividend yield and the potential for larger future hikes, making it an appealing investment for dividend growth investors [14].