Philip Morris International (PM)

A higher dividend yielding company. More than 4% dividend and a little bit of growth, but not quite high enough for him. It should do well for the remainder of the year.

(Market Call Minute.) They throw out a lot of free cash flow. Not expensive, but there is very little growth.

They have an innovative smokeless tobacco that he feels has huge potential. It had been hurt by the strong US dollar.

A cigarette company and has done very well. This was a split with Altria Group (MO-N) being the North American side and this being the International side. They throw up tons of free cash flow and have a great yield. The International has less restrictions. Incredibly well run. Dividend yield of 4.18%.

This company has a very good dividend yield, expanded its market share and came up with E cigarettes which has created a bit of excitement. If you are looking for a very safe dividend and a company with moderate growth, this is not a bad investment.

She doesn’t buy cigarette stocks in general because the industry is in a secular decline, even though they generate a lot of cash. This is a very defensive name with a high yield, but you can get that yield in other companies that are in a more positive growth industry.

They are not the same as they were in the earlier years. They used to take cash from tobacco and invest in growth businesses. Now they can pay out dividends or buy back stock with it. It won’t be a great growth company, but it will be safe like a bond. Don’t sell it. He would not buy it because there is no growth.

They have diversified into some food businesses. Smokeless tobacco has not been that big for them. 4.8% yield. You can go to other sectors without the same degree of risk.

Scores really well on a relative price momentum basis and volatility. A little expensive at 12X EBITDA and 18X price to free cash flow. Good yield of 5.2%. Balance sheet is in great shape. He would be comfortable holding this here.

An industry that is in secular decline with a lot of regulatory pressure. Over the long-term he doesn’t think it is a business that you particularly want to be invested in. Sentiment is swinging even more towards anti-smoking and anti-tobacco products. He would avoid this stock.

He has an issue that 40% of the S&P earnings come from abroad so it makes it challenging for companies that have even higher international exposure and this one is much higher.

Look at the dividend growth history. It has been very regular. He is big fans of this category. As a business model they are very attractive. Not expensive because of the regulatory risk.

In the developed economies, there is less cigarette consumption so it is more of a volume and pricing story. Because of their perceived litigation risks, these companies trade at quite low multiples and they tend to increase their dividends very regularly. He prefers British-American Tobacco (BTI-A), but likes this one as well. He would suggest that you buy this, hold it and put it away.

Likes the sin stocks and tobacco has been a great investment longer-term. Prefers British American Tobacco (BTI-A) because it doesn’t have the same level of liability risk. Indonesia and Vietnam are big growth drivers for them. Longer-term you should be fine.

Doesn’t think you are going to get a lot of growth out of this. Cigarettes are on the downturn. This is a cash flow income investment, and in this low rate environment, it will find winners. From a growth point of view, no. It is pretty clear that over time, your capital will go down.