24/7 Wall St. Insights

• Philip Morris International Inc. (NYSE: PM) stock has outperformed the S&P 500 this year and offers a safe dividend.
• The company has succeeded in diversifying beyond cigarettes.
• Also: Dividend legends to hold forever.

Philip Morris International Inc. (NYSE: PM) makes products that will never go away, at least entirely. These are cigarettes and smoke-free tobacco. The market has rewarded it. Philip Morris shares are up almost 40% this year, compared to the S&P 500 gain of 23%. It also has a 4% yield, which is safe because of the company’s iron-clad balance sheet.

In the most recently reported quarter, revenue rose 11.6% to $9.9 billion, and third-quarter diluted earnings rose 42.9% to $1.91 per share. The company also lifted its guidance for the full year. CEO Jacek Olczak commented, “In the third quarter, we delivered exceptionally strong performance, with record quarterly net revenues and earnings per share.”

Philip Morris succeeded in diversifying beyond cigarettes. About 38% of its sales come from smoke-free tobacco, which it sells in 92 markets worldwide. It sold 198 billion of its cigarettes and smoke-free product units worldwide.

The company also raised its dividend by 3.8% to $1.35 per share. Philip Morris will have about $11 billion in cash flow this year, and its dividend is likely to keep increasing.

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