2024-04-16 15:36:25 ET
Summary
- Philip Morris International's dividend yield is currently high and P/E low, indicating undervaluation.
- However, my concerns arise regarding the safety of the company's dividend due to high payout ratios and debt levels.
- I also see a realistic chance of a credit rating downgrade in the next ~2 years or so.
- This could further exacerbate its leverage issues and cause further negative market sentiment.
PM is undervalued
The thesis of this article is to explain the risks hidden behind Philip Morris International Inc.'s ( PM ) dividend yield. The chart below summarizes consensus ratings of the stock's dividend grades and compares them to the sector median. As seen, PM's dividend yield across all metrics receives an A grade . It is currently yielding almost ~6% (5.85% on an FWD basis to be exact), far higher than its 4-year average dividend yield of 5.41% and also the sector median (2.69% FWD and on average 2.39% for the past 4 years)....
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Philip Morris Yields 6% But Faces Credit Downgrade Risk