Philip Morris International (PM)

March 17th, 2009
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Philip Morris International (PM) manufactures and markets cigarettes and tobacco products outside of the U.S. It’s an incredible and appealing strategy. Sell an addictive and high margin product in parts of the world where you’re much less likely to be devasted in court than you might be here in the U.S.

In addition to many local brands that vary by country or region, Philip Morris brands include Bond Street, Chesterfield, L & M, Lark, Marlboro, Parliament, and Virginia Slims. Markets in which they operate include Africa, Asia, Canada, the EU, and Latin America.

I don’t often use long quotes, but quite frankly, I don’t know if I could ever say this better than Kiplingers recently did.

“Philip Morris International (symbol PM) was born in March 2008, when it was spun off from Altria. PM is a U.S. company, but it books all of its sales abroad (in 160 countries), where tobacco consumption continues to grow. . . .

The beauty for shareholders is that Philip Morris is a fantastically profitable business. Its return on equity is a towering 55%, and the company generates immense amounts of free cash flow (capital-investment requirements are minimal for cigarette companies), most of which is returned to investors through annual share buybacks and a steadily rising flow of dividends. The company is targeting annual growth in earnings per share of 10% to 12%. At the February 6 closing price, PM shares yielded a healthy 6%.”

So today PM is trading at $37.97, with a PE under 12 and a yield of 6%. It’s been awhile, but I think I’ve finally found an individual stock I can buy with some confidence. What do you think?

  
 

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Deer in the Headlights?

March 2nd, 2009
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I’ve got to admit that lately I’ve felt less like we’re the great buying opportunity opportunity of a lifetime, and more like we’re living under the Sword of Damocles. I respect that feeling, even though I’ve left most of my retirement money in stocks (including funds/etfs).

Since I know a lot of feel this way though, I wonder if I’m wrong, and look for evidence of that. Lately, I haven’t found much. And that’s why I really enjoyed an article from Seeking Alpha.

Thus, these companies are raising their dividends for two very solid reasons: 1. Their earnings are growing and they are confident enough in their prospects, even in a slow economy, that they are free to increase their dividends; 2. Almost all of the companies mentioned here have long histories of increasing their dividends. It is in their culture.

In particular, it has me taking another look at KMP and FPL. Do you think it’s time?

  
 

electric utilities, oil and gas pipelines , , ,