On June 8, Philip Morris International (PM) announced quarterly dividends of $1.14, a rise of 6.5% from its previous quarterly dividends of $1.07, and an annualized rate $4.56 per share. The dividends were announced at a payout ratio of 88.2% and a dividend yield of 5.7% given the company’s stock price of $79.42 as of June 8. Philip Morris stated that the dividends will be paid on July 11 to shareholders recorded as of June 22.
Including the recent increase, Philip Morris’s dividends have increased for 11 consecutive years since it went public in 2008. During this period, the company has raised its dividends 147.8%, which represents a compound annual growth rate of 9.5%.
On May 17, Altria Group (MO) announced quarterly dividends of $0.70 at an annualized rate of $2.80. The dividends were announced at a payout ratio of 70.0% and a dividend yield of 4.9% given the company’s stock price of $57.71 as of June 8.
Higher dividends appear to have increased investors’ confidence. Philip Morris closed the day at $79.42—a rise of 2.6% from the previous day’s closing price.
Despite the increase, Philip Morris is trading 24.8% lower compared to the beginning of 2018. Altria Group and British American Tobacco (BTI) have declined 19.2% and 26.4% year-to-date, respectively. The increase in anti-tobacco regulations, fewer smokers, and increased competition in reduced-risk products have impacted tobacco companies’ stock prices. The broader comparative indices, the S&P 500 (SPY) and the Consumer Staples Select Sector SPDR ETF (XLP) have returned 3.9% and -10.7%, respectively, during the same period.