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Philip Morris International Inc (NYSE:PM) offers investors a fast growing dividend opportunity. The company increased its annual dividend by 20.3% in December 2011, even as the management team is intently focused upon increasing annual dividends and creating shareholder value. In this article, I highlight why Philip Morris is the dividend growth stock to buy this week.

Philip Morris International is the international arm of Philip Morris. The company was spun off from Altria (NYSE:MO) on March 28, 2008. Philip Morris holds an estimated 16% of the global market in terms of sales of tobacco, from premium to local products, distributed across 180 countries the world over. Philip Morris consistently holds the top two slots in tobacco sales.

With the growing concerns over the health of tobacco smokers, Philip Morris works with various governments on the creation of better legislation in order to lessen the impact of tobacco use on the overall health of its market. Along with this, Philip Morris is involved in various programs to develop better products to reduce health risks.

Philip Morris dividend history

The company's dividend was increased by 20.3% beginning for the third quarter of 2011.

Altria dividend history

Altria Group sells cigarettes, and smokeless products (e.g., chewing tobacco) in the U.S. The company also sells wine on a global basis. Core brands are Marlboro, Virginia Slims, Parliament, Copenhagen, and Skoal.

The above table illustrates the 7.9% dividend increase in August 2011.

Corporate life after Altria: 2008 through to present day

Since the separation from Altria, Philip Morris has effectively established a working international presence in the tobacco industry. In 2009, Philip Morris bought the Swedish Match South Africa (Proprietary) Limited for $256 million. This eliminated a competitor in tobacco sales in the South African market. In the same year, Philip Morris bought the Petterøes tobacco business at the cost of $209 million. This removed a competitor in Norway and Sweden.

With these purchases, Philip Morris made arrangements with Swedish Match AB (SWMA) for a joint venture and introduce smoke-free tobacco products to be marketed internationally. Trademarks and intellectual property rights were part of the joint venture agreement.

For 2010, Philip Morris combined selected assets and liabilities in the Philippines with Fortune Tobacco Company (NYSEARCA:FTC), a move that resulted in PMFTC Inc, where both Philip Morris and Fortune Tobacco Company each own half of PMFTC Inc, with Philip Morris conducting its daily operations. In addition, Philip Morris also holds a majority of PMFTC's board of directors.

In southern Brazil, Philip Morris International owns Philip Morris Brasil. The company purchases its supplies directly from local farmers in the country. With agreements from the two main leaf suppliers in Brazil, including Alliance One Brasil and Universal Leaf Tabacos, the company has a an extensive local tobacco organization.

Three acquisitions marked 2011 for Philip Morris International. First in the year was a cigarette business in Jordan, with assets ties to cigar manufacturing, for the price of $42 million. Another trademark acquisition in the Australian and New Zealand markets cost Philip Morris $20 million. Then in Vietnam, a joint venture with the Vietnam National Tobacco Corporation was formed.

Philip Morris today

The company is stronger than ever. The company's 2011 earnings were $4.85. This is a 23.7% increase from the prior year. Per a March 19th presentation, the company continues to grow in key countries with significant growth opportunities.

Two things make Philip Morris stand out in the month of March 2012. The first is that Philip Morris declared a quarterly dividend of .77 cents per common share for the first quarter of 2012. The dividend is payable on April 12, 2012, for shareholders on record as of March 29, 2012. The second news from Philip Morris is that it sold USD $1.25 billion in senior unsecured notes in two parts.

The acquisitions of Philip Morris in the tobacco industry along with its alliances with competition or affiliates demonstrates that Philip Morris is in firm footing with the market. Its top brands, including Marlboro, have been consistently occupying the top two slots in worldwide sales.

Next Generation products

The Next Generation Products, as the company refers to the products, are supposed to carry less risk in terms of smoking-induced diseases. The firm has already invested in the research and development of healthier products.

The movement of Philip Morris International, traceable since its separation from Altria, shows slow but methodical steps in acquiring patents and intellectual property rights, all the while maintaining its operations and strengthening its position in various countries such as the Philippines, Vietnam and Brazil.

Regardless of where Philip Morris is heading, the company is not showing any signs of wavering - if ever, all its movements have been towards a stronger position, regardless of legislation issues, growing awareness of the health risks of tobacco, and a market predominantly aware of such risks. That Philip Morris has even been able to declare quarterly dividends is a sign that the business of Philip Morris is all well and good, with no signs of weakening.

Competition: British American Tobacco

British American Tobacco (NYSEMKT:BTI) is a leading global producer of cigarettes and tobacco products. British American Tobacco operates in the production and sale of cigarettes, cigars, smokeless snus, and pipe tobacco. Brands include Dunhill, Kent, Lucky and Strike. The company has a $100 billion market cap. The current yield is approximately 4-5% per year depending upon currency fluctuations.

British American Tobacco Dividend History

The share price has accelerated upward as investors seek income and recession resistant companies. British American Tobacco offers growth and a strong company for years to come.

I believe dividend investors should purchase Philip Morris at current valuations. Assuming 2012 earnings per share are $5, the stock is trading at a reasonable 17x price to earnings multiple. The annual dividend should increase from the current 3.5% yield.

Disclosure: I am long PM, BTI, MO.