Wednesday, September 12, 2012

Dividend Increase: PM

Philip Morris International (PM) is increasing its quarterly dividend by 10.4%, from $0.77 to $0.85 per share, putting the company on track for its 5th consecutive year of dividend growth. Given that I own 50 shares of PM, my quarterly dividend increases from $38.50 to $42.50, which will add an extra $16.00 to my annual dividend income. This dividend increase also boosts my yield on cost to 5.05%. Thus far this year, there have been dividend increases for 18 of the 22 dividend growth stocks in my portfolio.

6 comments:

  1. I love dividend raises!! Especially when there over 10%. Good for you DGM!

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    1. Anonymous: Thanks -- I'm always delighted to get a double-digit percent dividend increase!

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  2. Great increase here...and it follows the 7% increase from Mo recently.

    PM has had some weakness lately and is looking attractive again. I already have a fairly large sized position at 80 shares, so not sure I want to add to that now.

    My concern with PM is the plain packaging in Australia and whether that could spread to Europe and beyond. Certainly the growth for PM is in Asia, but the plain packaging is certainly concerning. It pretty much takes away Big Tobacco's last advertisement. What are your thoughts on that? If the plain packaging is successful in Australia, I could easily see this spreading.

    Best wishes!

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    1. Dividend Mantra: Thanks for your comment. I also have a fairly large position in PM, so I am not really looking to increase it at the moment. Regarding plain packaging, I think it is too soon to tell how it will affect their business. It will reduce brand recognition, but if that happens across the board (i.e., their competitors also lose brand recognition), then the effect on PM in particular might not be too bad. However, it is something that will need to be monitored over time.

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    2. Regarding plain packaging: We have an anti-smoking legislation in Finland (propably some other European countries have it too)where retailers had to rearrange sales points so that cigarette packages cannot be seen by customers. Also the pictures of brands or cigarette packs on vending machines were replaced by numbers. So the customer has to know which brand he will have and then request it from the salesperson (or use a numbered list when using the vending machine). The regulators hoped that this would have a negative effect on cigarette sales, but according to recent news, the sales have actually grown despite this regulation. This makes me believe that the cigarette industry will survive from the expected plain packaging too and will continue to generate significant cash flow to the owners. I'm pretty confident with my PM holdings and I'm also looking to increase my position.


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    3. Mikko: Thanks for that information. I appreciate hearing about how regulations affect businesses in various countries, so it is helpful to learn about the effects of the anti-smoking legislation in Finland.

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