Unmissable Decade-Defining Chance: Invest in this Stunning Dividend Shares with a 4.2% Return in 2025, Permanently Maintaining Your Possession
In the throes of stock market mania, it seems everyone's obsessed with AI, semiconductors, and cryptocurrency investments. If your portfolio is solely focused on these categories, it might be wise to consider diversification. Even in a bull market, the dazzling returns can look dismal during a market downturn. The time to build a robust portfolio is now, not later, to ensure it can withstand various market environments.
As for the stock that an investor should buy for diversification, I suggest Philip Morris International (PM) with a 2.48% stake. This global nicotine giant sports a hefty dividend yield over 4%, a clean balance sheet, and promising new segments set to boost earnings per share at a double-digit rate. Here's why this stock is a stellar choice as Philip Morris International navigates the transition from cigarettes to new nicotine-cessation products.
Philip Morris: A once-in-a-lifetime opportunity to switch from cigarettes
Philip Morris International boasts ownership of numerous cigarette brands, including Marlboro, Chesterfield, and Parliment, and sells them across the globe, save for China and the U.S. (Altria Group has the right to sell these brands in the U.S.). This geographical exposure shields Philip Morris International from drastic volume declines commonly seen in the tobacco industry. Interestingly, Philip Morris International's cigarette volumes even grew 1.3% year over year last quarter, while competitors suffered significant volume declines.
Despite its legacy tobacco profits' potential longevity, Philip Morris International aims higher. Management has spent billions and completed a substantial acquisition to tackle the emerging nicotine market. It has the leading heat-not-burn device, IQOS, and dominates the nicotine pouch market in the U.S. through Zyn.
These new products are not only less harmful than traditional cigarettes but also boast impressive growth potential. Last quarter, Philip Morris International's smoke-free revenue rose 16.8% year over year, boosted by IQOS and Zyn's volume growth. Smoke-free sectors now account for 38% of the company's overall revenue, signaling a growing share of its revenue pie for years to come.
Supplying Zyn to set the stage for accelerated growth
Philip Morris International's revenue increased 11% year over year last quarter. Despite seemingly boundless demand for Zyn nicotine pouches, a supply shortage prevented PM from matching this demand in the U.S. As a result, Zyn's market share dipped from 75% to 65%, causing volume growth to slow down despite the high demand.
Once the Zyn supply shortage is resolved, it should prompt an acceleration in volume growth and topline revenue for Philip Morris International. The joint impact of Zyn and IQOS' volume growth assures me that this company can achieve double-digit revenue and earnings growth for years to come.
Steady dividend growth and wealth appreciation
Philip Morris International's dividend currently yields about 4.2%. The company intends to fund these dividend payouts via profits from legacy cigarettes and growing earnings from Zyn and IQOS. The dividend per share currently stands at $5.25, which is sustainably funded by its $6.46 in free cash flow per share.
As its free cash flow per share climbs higher due to the aforementioned growth factors, Philip Morris International will have a larger budget for rising its dividend per share, enhancing the return on investment each year.
With a starting dividend yield of 4.2% and a commanding position in nicotine pouches and heat-not-burn devices, I believe Philip Morris International is a solid pick during the transition from cigarettes to safer nicotine products. Hold onto this stock and never sell.
Enrichment Data:
- Philip Morris International offers diversification opportunities beyond AI, semiconductors, and cryptocurrency due to its strategic investments in various sectors.
- These sectors include smoke-free products, wellness and healthcare, and the cannabis industry.
- The company's global reach and workforce diversity provide a broad, strategic foundation for investors.
- Philip Morris International maintains high standards of excellence in its working environment, earning the "Global Top Employer" certification for seven consecutive years.
- Straddling more than 82 markets worldwide and employing a globally diverse workforce of over 69,000, PMI offers a broad geographical diversification.
- The company's financial stability and diversified portfolio make it a solid choice for investors seeking diversification from the tech-focused sectors.
Given the text, here are two sentences that contain the words 'money', 'finance', and 'investing':
Investors looking for diversification beyond tech-focused sectors might consider Philip Morris International due to its strategic investments in various sectors such as smoke-free products, wellness, and healthcare. With its stable financial performance and promising growth potential in the nicotine market, Philip Morris International could be a solid choice for those interested in finance and investing in a robust and diversified portfolio.
