howard_roark

Philip Morris International and Altria: Compare and Contrast

I own both PM and MO, and I feel that the combination gives me steady dividend growth. While share price of each might increase at different speeds, growth is almost certain.

Altria: Value Play or Value Trap?

Do those numbers reflect the spin of KFT and PM? I would guess not, because Altria (MO, the domestic tobacco unit that we're discussing in this thread) has been providing shareholders annual returns in double digits for years. Sure, cigarette sales are down, but the company has turned to other sources to grow income.

The incredible pricing power of the Marlboro brand allows the company to fend off tax increases by raising prices on cigarettes. Year over year, cigarette sales are down, but the vast majority of smokers continue to pay any price for Marlboros, and they will continue to do so.

The Master Settlement Agreement has insured that MO will be around for a long time. The company has to exist and be profitable so it can make the payments to the states as mandated by the agreement. The proposed FDA regulation of tobacco will insure that MO maintains its market share and will keep MO as the preeminent tobacco company in the United States.

The annual dividend is $1.28 for this stock, which is trading for around $17. MO has raised the dividend annually for 30 years or so, and at a time when many companies are cutting or eliminating their dividend, I'm willing to bet anyone that MO raises theirs from 8-10% this summer.

If you kept the international unit (PM) after the spin, you will be astounded at the future growth. The dividend of $2.16 for a stock that closed at $41 or so Friday is almost 6%, so that's pretty nice too.

MO has been the core holding in my IRA for many years, and is one reason why I'll be sitting on a beach somewhere enjoying a drink with a little umbrella in it pretty soon.




On May 08 05:13 PM consumeronstrike wrote:

> Here's another thought;
> Sales growth last 5 years for Altria = MINUS 25%

Altria: Value Play or Value Trap?

Thanks for you reply, Ryan. KFT's main problem appears to be rising commodity costs, which have impacted the company's margins. When earnings were announced last month, the CEO indicated that the new focus was on margins, so Warren may know something!

Altria: Value Play or Value Trap?

I agree that Altria is facing some headwinds in the cigarette tax area, but this company has diversified to meet those challenges. The acquistion of UST gives the company a dominating presence in the smokeless market, and they picked up the St. Michelle wine business in the deal also. Purchasing the Middleton cigar company over a year ago further shifted the focus off of cigarettes, and has proven to be a very profitable move.

And what about the company's 28% stake in SAB Miller beer?

I agree that PM offers tremendous growth opportunites, and I own both MO and PM. I jettisoned KFT after the spin off, because that was truly the rotting piece of the company.

Why I Pick on Pfizer

Derek, I have a large position in PFE, but I found your article interesting. Do you think the company needs to restructure into smaller units to be able to focus more fully on new and innovative medicines? Or do you think the company is so bloated that there's really no answer to their problems?

Not Running Out to Buy Shares in Pfizer

I like PFE because of the fat dividend yield, and I add to my position as often as I can. Dividends are important to me because my shares are held in my Roth IRA and they are essentially tax free if I don't cash out before age 59 1/2.

I realize the Lipitor problem coming in 2011, but I also recognize that the restructuring plan is working and is already saving the company a great deal of money. Getting leaner and more efficient certainly helps margins and can offset revenue loss until another blockbuster comes along.

The pipeline looks reasonably strong, and PFE has 26 billion bucks in the bank.

PFE is not gonna pop back into the twenties or mid-twenties overnight, but I'm happy to collect my dividends until it does. I think it's also a solid holding in these recessionary times.

Good luck to all PFE longs.

Earnings Preview: Pfizer

I don't think that PFE is a value trap as you pointed out in your article. You made some very good points, but I believe that with the company's history of dividend raises and payouts, it's a good buy and hold at these levels.

I agree that PFE must make an acquisition to bolster its pipeline--I think the company is biding its time to weigh all factors and choose the right target. And I think that target won't be a small cap company--I believe that BMY and SGP are likely takeout targets and this fall I think PFE might make a move. Until then, I hope that PFE maintains its market cap and I hope to continue to collect the fat dividend.

Long term, I think PFE is a good place to be.

Big Pharma Stocks: Real Rally or Just a One Day Wonder?

Hi Mike, good article. I'm optimistic about drug stocks. I'm long PFE and have been feeling quite a bit of pain, but I think all of the bad news is cooked into most pharmaceutical stocks. I'm willing to keep adding to my position on dips and collect the nice dividend until the sector resuscitates.

Pfizer's Failures and Fight for Lipitor

It appears that most of the bad news about PFE is out and priced in to the stock. The recent bounce from $20 territory may indicate that the bottom is in, and there may be significant upside if PFE makes an acquisition to beef up the pipeline.

The dividend yield is certainly attractive at these levels and for the long term investor, upside share price is almost inevitable.

JMHO.