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Wednesday, 09/26/2001

MO - Phillip Morris

Company Description

Phillip Morris is a holding company whose principal wholly owned subsidiaries, Phillip Morris Incorporated, Phillip Morris International Incorporated, Kraft Foods Incorporated, and Miller Brewing Company, are engaged in the manufacture and sale of various consumer products. A wholly owned subsidiary of the company, Phillip Morris Capital Corporation, engages in various leasing and investment activities. The company's significant industry segments are domestic tobacco, international tobacco, North American food, international food, beer and financial services.

In 1902, Phillip Morris was incorporated in the United States, where it began building its global position in the tobacco business. By the 1950s, Phillip Morris was making its first forays outside of tobacco. The trend toward diversification accelerated in 1969-70 with the acquisition of the Miller Brewing Company, and then again in the mid-1980s with the purchase of General Foods and Kraft Foods. In 2000, the historic settlement of claims by State Attorneys General against the U.S. tobacco industry paved the way for a new era of engagement and cooperation on tobacco issues.

(Source: Phillip Morris)

Reasons To Invest

Say what you will about Phillip Morris, its stock has been one of the best performing stocks in the Dow Jones Industrial Average over the past year, and for good reason, too. The company's financial position is the envy of many.

In the past year, Phillip Morris generated free cash flow of more than $15 billion. Its debt is minimal, cash position is bulky, and its dividend is appealing. Sure, the company's 8 percent estimated growth rate is by no means a barn burner. But, its reliability is certainly appealing in the current economic and market environments.

Phillip Morris' businesses are relatively immune from economic recession. In times of contraction, consumers are less likely to curb their smoking habits than, say, purchasing a new car or cell phone. Consumers are less likely to stop eating, too.

Because of its broad, diverse business lines, Phillip Morris should be able to meet or exceed its earnings projections for fiscal 2002, which currently call for the company to earn $4.57 per share. That's right, $4.57 per share!

If Phillip Morris at least meets its estimates next year, the stock would then be given a current forward-looking multiple of 10. In a word, cheap!

But, perhaps the most appealing attribute of shares of Phillip Morris currently is the stock's big dividend yield. Currently, the yield on shares of Phillip Morris is approaching 5 percent. While 5 percent is miniscule to some for an annual return, it's especially attractive to all those investors with money sitting on the sidelines in accounts earning less than 3 percent. Furthermore, with the Federal Reserve expected to take rates down yet again in early October, the yields on money market accounts should fall even further. That's why Phillip Morris' dividend yield may become very attractive in the coming months. The company's dividend is most certainly safe, and its shares may even see some capital appreciation as money moves from money market accounts into relatively safe high yielding stocks.

DRIP Information:
Shares to Qualify = 1           Accept Foreign Accounts: Yes
Auto-reinvestment = Yes         Temper Enrollment Serv:  Yes

Min/Max Investment = $10 to $60,000/year
Reinvestment Fees: 
Dividend: 0   Cash: 0   Auto ReInvest: 0

Transfer Agent:

First Chicago Trust


Industry Group:    Tobacco, Food  52-week high=$53.88
Annual Dividend Per Share= $2.32  52-week low =$27.50
Last earnings 06/15     est=1.03  actual=1.03
Next earnings 10-17     est=1.07  versus=0.99
                                  P/E = N/A
Analyst Ratings:
Strong Buy    = 4
Moderate Buy  = 4
Hold          = 1
Moderate Sell = 0
Strong Sell   = 0


Copyright 2003

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