Philip Morris International Inc (PM) – is the world’s largest publicly traded tobacco company after being spun off from Altria Group (MO) in 2008 and has been one of the best dividend paying stocks of all time.
Despite having given the following example ad-nauseum, I’ll drill it home once more: $2,000 invested in Phillip Morris back in 1980 would’ve grown to over $670,000 today and would be paying over $9,600 a year in dividends.
Tobacco stocks are absolute cash-machines…the problem is, over the years litigation and increased anti-smoking campaigns have reduced demand and taxed profits. There is one convenient little way to bypass these issues, though….they only exist in America. So invest in tabacco stocks that are growing abroad – and PM is a great example.
The company has almost 16% of the world market for cigarettes (led by its Marlboro brand, which accounts for almost a third of sales). About 41% of total sales come from the EU, 24% from Middle East & Africa, 22% from Asia and 13% from Latin America (and Canada).
Aside from the potential for future dividend growth from its current yield of about 4.4% (which isn’t too shabby at all in this low interest rate environment), management is using cash to buy back shares as well, so investors will get higher dividend payments on fewer outstanding shares.
Point is – every dividend investor should seriously consider some exposure to Phillip Morris.