Philip Morris Is Still a Smoking Hot Investment A long-term dividend stock play for income investors

Philip Morris (NYSE:PM), through its subsidiaries, manufactures and sells cigarettes and other tobacco products. Its portfolio of international and local brands include Marlboro, Merit, Parliament, Virginia Slims, L&M, Chesterfield, Bond Street, Lark, Muratti, Next, Philip Morris, and Red & White. The company was created after the spin-off of Altria’s (NYSE:MO) international operations in 2008.

The spin-off was orchestrated in an effort to separate international operations from regulation and litigation risk in the US.

Philip Morris International has managed to boost distributions in each year since the spin-off. Quarterly distributions have increased from 46 cents/share in 2008 to 77 cents per share in 2011. I expect low double digit growth in distributions over the next five – ten years. This will be driven by strong performance by company’s brand name products globally, which will drive profitability higher.

The growth in earnings per share will be driven by several factors. The company expects to generate 10% to 12% annual growth in earnings through its cost reduction programs, acquiring companies internationally as well as innovating in growing markets in order to position itself favorably. (more)