Dividend Watch: Dividends From The Morris Family Before Earnings (MO, PM)

Altria Group Inc. (NYSE: MO) is seeing its stock do what many investors a decade ago might have bet against.  The stock is hitting what is an all-time high if you factor in the Philip Morris International, Inc. (NYSE: PM) spin-off.  Earnings are next week for both of these and we wanted to see how this stacks up for dividend investors next week and for the year.

Altria Group Inc. (NYSE: MO) may see another higher dividend this year (but likely not next week) as the company has signaled higher payouts.  The $0.38 dividend has gone for three quarters in a row and the last payout was just on March 11, 2011.  Altria’s current yield is 5.6%.  What is important is for investors to realize that on a dividend adjusted basis that Altria closed out 2010 at $24.26. That puts shares up 11.3% so far in the short time of 2011 year-to-date.  With shares around $27.00, its new 52-week trading range is $19.20 to $27.05.

Philip Morris International, Inc. (NYSE: PM) currently yields only 3.9% for investors.  This is tiny, but we expect this to rise handily.  Philip Morris International generates all of its income outside of the United States.  If the dollar is weaker, many might wonder why the dividend here is not as high as Altria’s dividend. The company has not had as many years to accumulate as much cash may be one explanation, and the other explanation may be that it needs to keep using its capital for growth in emerging markets rather than handing it out to shareholders. 

The good news for ‘international’ is that investors are likely to see a payout hike in September as we have seen in the last three years (0.54 to $0.58 to $0.64).  Thomson Reuters has 2011 and 2012 earnings estimates at $4.46 EPS and $4.94 EPS, respectively.  We’ll go ahead and predict that the dividend for “International” will bump up to $0.69 or $0.70 per quarter.  At $66.38, Phillip Morris International has a 52-week trading range of $42.94 to $67.28.

JON C. OGG