Finding value in this very bullish market isn’t the easiest task. While most stocks only go up and up, some stocks are struggling more. Two of those struggling stocks are Altria and Philip Morris – two companies we have seen often as a Watchlist recommendation here at Stockles.

I continue to believe that the market is wrong and overreacting to both companies. Many of my thoughts can be seen in previous Watchlist updates. I think I wrote something about both companies in Watchlist May or April.

Today, I bought 20 shares of Philip Morris International at $79.77 which adds 91 USD to my dividend income.

Source https://www.simplysafedividends.com/

Here’s what Philip Morris is saying about the future

We’ve built the world’s most successful cigarette company,
with the world’s most popular and iconic brands.

Now we’ve made a dramatic decision.

We will be far more than a leading cigarette company. We’re building PMI’s future on smoke-free products that are a much better choice than cigarette smoking.

Indeed, our vision – for all of us at PMI – is that these products will one day replace cigarettes.

Why are we doing this?

Because we should.

Bold. Just the way I like it. A company who’s able to see that the world is changing, and doing everything they can to adapt.

What’s more, Since 2008, has had an annual yearly return at 9.61% and returned 161% against SPY at 175%.

Look at that crazy profitability. ROI at 40% and insane margins. Even more, the free cash flow per share is increasing too which currently gives us a 24% positive free cash flow margin. That is just an amazing number!!!

Source https://www.simplysafedividends.com/

The number of shares is going down.

Can management use my money to create shareholder value? In other words, Increase ROIC?

Hell yeah they can!

Source https://www.simplysafedividends.com/

That’s it. I am very pleased with my entry and hope to collect my shares should the market continue to doubt PM.

Take care,

Stockles


4 Comments

DivvyDad · August 24, 2018 at 7:57 pm

Very nice purchase Stockles, had I owned PM in place of MO I would have been looking to do the same. I just added another 30 shares of MO for much the same reasons that you have mentioned here about Philip Morris.

    Stockles · August 24, 2018 at 8:39 pm

    HI Dividad,

    Somebody asked me why I choose MO over PM.

    Here’s my answer:

    Mostly because of the global market potential compared to MO which is mostly based in US. Also, the difference in tax:

    What is an “80/20 company”? Is PMI one?

    An “80/20 company” is a U.S. company 80% of whose gross income for a specified period is generated from active businesses outside the United States. Because nearly all of its income is earned in active businesses outside the United States, PMI has determined that it qualifies as an 80/20 company for U.S. tax purposes.

    As a non-U.S. shareholder of PMI, how does PMI qualifying as an “80/20” company affect me?

    PMI has determined that 97% of any dividend it declares in 2018 to a non-U.S. shareholder is exempt from U.S. withholding tax.

    This means that the remaining 3% of the total gross dividend is subject to U.S. withholding tax at the 30% statutory rate, unless the non-U.S. shareholder provides a Form W-8BEN claiming a reduced rate of withholding under an applicable income tax treaty.
    In the case of a non-U.S. shareholder who is not eligible for a reduced rate of withholding under an applicable income-tax treaty, except in certain limited circumstances, a withholding tax at the 30% statutory rate will be applied to the remaining 3% of the total gross dividend.

    Will dividends declared by PMI always be eligible for a 97% exemption from U.S. withholding tax for non-U.S. shareholders?

    Not necessarily. Although the company believes that dividends declared in 2018 qualify for the exemption, eligibility for the exemption is determined annually, and no assurance can be given regarding whether dividends declared next year or in any subsequent year will qualify for the partial exemption nor that the percentage of the dividend exempt from withholding tax will not be greater or less than 97% in any subsequent year.

    But overall, I think it makes sense to own both companies

Tim McIntyre · January 11, 2019 at 12:46 pm

Been debating with myself should I increase my number in PM ever since I saw a plateau in my overall portfolio that has to do with the food industry (because I was a professional of the sector few years ago). Think I will get some this year for my long-term goals.

Watchlist September 2018 - Stockles Blog · March 4, 2019 at 3:05 am

[…] I think both firms are still valuable. I send you to my article about Philip Morris here. http://www.stockles.com/2018/08/24/recent-purchase-philip-morris-international/ […]

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