Billionaire Investor's Top Choices Lifting Philip Morris Stock

Tracking Renowned Investors for Smart Choices

Tracking the movements of famed investors can provide valuable insights into the stock market. One such investor, Stanley Druckenmiller, has impressively delivered 30% returns for 30 consecutive years in his hedge fund, showcasing his expertise. It's this type of savvy investment strategy that makes it worthwhile to monitor the stocks he buys and sells.

While it’s crucial not to follow these legends blindly, their actions can serve as inspiration for identifying promising stocks to consider for your own portfolio.

Druckenmiller's Portfolio Reveals New Picks

Investors can gain insights into the strategies of large investment funds as they are required to disclose their transactions quarterly. Recently, Druckenmiller's family office recognized potential in the growing dividend payer Philip Morris International (NYSE: PM). Despite the stock's impressive total return of 36% year to date, Druckenmiller continues to express optimism about its prospects.

This brings the question: should you consider investing in Philip Morris International stock for your investment portfolio?

Innovative Products Driving Growth

Philip Morris International is often categorized within a declining tobacco industry. At the beginning of the year, the company offered a compelling dividend yield of 5.5%, which surpasses the average yield of large-cap stocks. However, some investors have refrained from exploring tobacco investments, given the noted decline in cigarette consumption.

Yet, 2024 has marked a turning point for Philip Morris International due to the rise of its innovative nicotine products, including heat-not-burn products and nicotine pouches. The company reports over 36 million active users engaged with these smoke-free alternatives, leading to a stabilization and growth in shipment volumes in recent quarters. Last quarter's growth is evident, as smoke-free gross profit soared by 22.2% year over year, contributing to a solid 12.5% increase in consolidated operating earnings.

Expectations for Earnings Growth and Dividend Expansion

Looking ahead, Philip Morris expects earnings per share (EPS) to hover around $6 for 2024, an increase from $5.02 in 2023, which would represent an all-time high. The firm's new-age products are generating significant earnings growth, translating to greater profitability.

Tracking EPS is essential given its direct correlation with Philip Morris' quarterly dividend payouts. Recently, the company announced a dividend increase to $1.35 per share, equating to an annual total of $5.40. This remains below the anticipated EPS guidance of $6 for the current year, suggesting substantial potential for continued dividend increases over the next five to ten years.

Desirable Dividend Yield in a Competitive Market

As Philip Morris International's stock price has risen, its dividend yield has contracted to 4.1%. Even so, this yield remains above the 10-year U.S. Treasury yield of 3.6%, which presents a maintained opportunity for growth. Analysts note that, within five years, there’s potential for the company's EPS to command $10, pointing towards a possible increase in dividends to $9, yielding an impressive forward dividend yield of 7.1%, based on a current stock price of $126.

As more consumers transition from traditional cigarettes to innovative heat-not-burn alternatives and nicotine pouch products, it suggests a steady income stream for shareholders, making Philip Morris International a desirable option for those focused on dividend growth.

Is Now the Right Time to Invest in Philip Morris International?

Before making a decision to invest in Philip Morris International, consider the broader landscape and investment strategies presented by analysts. Although assessing influential stock recommendations is crucial, investors should weigh their options carefully to determine if this stock fits their portfolio strategy.

It's essential to stay informed and critical of investment opportunities like Philip Morris International. Market shifts can affect such decisions, and having a careful approach can yield favorable outcomes. Whether or not to invest now, monitoring dividend-paying stocks like Philip Morris International can provide insights into potential profitable ventures.

Frequently Asked Questions

What stocks are favored by renowned investors like Druckenmiller?

Renowned investors like Druckenmiller often favor stocks with solid growth potential and dividend-paying capabilities, such as Philip Morris International.

Why is Philip Morris International considered attractive for investment?

It is attracting attention due to its evolving portfolio, innovative products, and strong dividend yields compared to other investment options.

What is the expected earnings growth for Philip Morris International?

For 2024, Philip Morris expects earnings per share (EPS) around $6, indicating significant growth potential over previous years.

How has Philip Morris' dividend changed recently?

Recently, Philip Morris increased its dividend to $1.35 per share, highlighting its commitment to returning value to shareholders.

What factors could affect Philip Morris stock in the future?

Market trends, shifts in consumer preferences, and competition among alternative products could significantly impact Philip Morris International's stock performance.

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