{"id":24118,"date":"2011-09-28T07:17:20","date_gmt":"2011-09-28T11:17:20","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=24118"},"modified":"2011-09-28T07:17:20","modified_gmt":"2011-09-28T11:17:20","slug":"the-safest-international-dividend-payer-on-earth","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2011\/09\/28\/the-safest-international-dividend-payer-on-earth\/","title":{"rendered":"The Safest International Dividend Payer on Earth"},"content":{"rendered":"

By Paul Tracy, DividendOpportunities.com<\/a><\/strong><\/p>\n

I’ve found what I think is one of the safest dividend paying stocks on the planet.<\/span><\/p>\n

During the past year, this company earned $8.1 billion dollars in profits. It only distributed $4.5 billion in dividends. In other words, it could see its earnings fall more than 40%… and still be able to maintain the dividend.<\/p>\n

\"\"At the same time, this company’s stock has held strong in the downturn, especially compared to the broader market. In fact, if you go back to just before the downturn started, it’s down only about 2% — compared to a double-digit drop in the S&P 500. Just take a look at the graph.<\/p>\n

But let me tell you, it’s not billions of dollars in earnings that cover the dividend payment or strong performance in a rocky market that make me think this is one of the safest dividend stocks in the world.<\/span><\/p>\n

While a healthy dividend and reduced losses may be nice perks for investors, it’s what this company does that makes it so stable.<\/p>\n

You see, when the economy’s strong, people don’t have a problem buying high-tech gadgets or spending bundles on luxuries. But as soon as the economy starts to head south, these expenses are the first to be cut.<\/p>\n

But there are some goods that people always buy, regardless of the economy. These “necessities,” and the companies that make them, often perform well — even during times of financial uncertainty.<\/p>\n\n\n\n
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Take cigarettes for example. It doesn’t matter much what the economy is doing, people will still buy cigarettes. That’s good news for cigarette makers like Philip Morris International (NYSE: PM<\/a>)<\/strong>.<\/span><\/p>\n

Philip Morris International is the world’s second-largest tobacco company (behind China National Tobacco) and holds almost 16% of the non-U.S. market. PMI’s brands include seven of the world’s top 15 names, including Marlboro, the number one cigarette brand worldwide.<\/p>\n

This company is a spin-off of Altria’s (NYSE: MO<\/a>)<\/strong> cigarette business outside U.S. borders. Altria continues to sell its brands, including Marlboro and Merit, in the United States, but that business is slowly shrinking.<\/p>\n

Outside the U.S., it’s a different story.<\/p>\n

For all of 2010, Philip Morris International saw cigarette sales rise 4.1% (thanks to acquisitions), while revenues increased 8.7%.<\/p>\n

Looking at sales volume, Europe remains the company’s single most important market. Right now, 38% of Philip Morris’ sales come from Europe.<\/p>\n

But things are changing. High taxes and new tobacco regulations are pushing down sales in countries like Greece, Spain and France, places where per-capita tobacco consumption has historically been pretty high.<\/p>\n

However, even though fewer smokers in developed countries are lighting up, estimates still say that there will be 1.4 billion smokers globally by 2020. That’s up from the 1.3 billion out there today.<\/p>\n

So if it’s not the U.S., and it’s not Europe, where are all these new smokers coming from?<\/p>\n

The emerging markets.<\/p>\n

As countries in these regions expand, there’s a substantial increase in the disposable incomes of their citizens. With a little more money in their wallets, a larger percentage of the population can afford premium international cigarettes.<\/p>\n

But of course, we’re most interested in the dividend — and its safety.<\/p>\n

Currently, Philip Morris International pays $0.77 per share every quarter; it also announced a 20% dividend increase earlier this month<\/strong>. That amounts to $3.08 per share every year, or a 4.8% yield at recent prices.<\/p>\n

That might not sound like much to write home about, but here’s the kicker — PM has raised the dividend 67.4% since 2008.<\/p>\n

\"\"And the company can afford this increase to its dividend. Like I said earlier, PMI has a payout ratio of 55% over the trailing twelve months, indicating plenty of room for future growth… and a near zero risk of a cut at this time.<\/span><\/p>\n

So though the shares currently yield 4.8%, investors who buy now are likely to see their yield on cost rise over time.<\/p>\n

Now, I know investing in cigarettes may not be for everyone, and I am by no means condoning the behavior. But as an analyst, it’s my job to find ripe investment opportunities. And with a history of steady cash flow, the strongest brand names in the industry, and substantial emerging market growth, Philip Morris International is an ideal safety-first income play.<\/p>\n

That doesn’t mean this investment is risk-free — nothing short of a savings account is. However, I do think the stock ranks high among the safest dividend-payers in the world.<\/p>\n

But Philip Morris is just one of the many income-paying prospects available from companies focused overseas. In fact, I think the abundance of international income investments is one of the market’s best-kept secrets… there are literally thousands of high-yielders abroad.<\/p>\n

To prove this, I recently had a member of StreetAuthority’s research staff comprise a list of profitable companies with shares yielding 12% or more. What we found was pretty remarkable.<\/p>\n

In total, my team found 430 common stocks paying dividends of 12% or higher. However, only 18 of these companies were located in the U.S. The other 412<\/span> were located in international markets.<\/p>\n

That means if you want high yielding stocks — then 96% of your opportunities are located outside the United States.<\/strong> But don’t worry, you can buy many of these without even leaving the U.S. markets.<\/p>\n

I have more details — including several names and ticker symbols<\/strong> — in a presentation I recently put together. Visit this link to watch now<\/a><\/strong>. In the presentation, I’ve even included the full list of the 18 U.S. companies yielding above 12%<\/a><\/strong>.<\/p>\n

All the best,<\/p>\n

\"\"<\/p>\n

Paul Tracy
\nStreetAuthority Co-founder, Chief Investment Strategist — <\/span> High-Yield International
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Disclosure:<\/strong> <\/span> Paul Tracy owns shares of PM. StreetAuthority owns shares of PM as part of the company’s various “real money” portfolios.\u00a0In accordance with company policies, StreetAuthority always provides readers with at least 48 hours advance notice before buying or selling any securities in any “real money” model portfolio.<\/span><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

During the past year, this company earned $8.1 billion dollars in profits. It only distributed $4.5 billion in dividends. In other words, it could see its earnings fall more than 40%… and still be able to maintain the dividend.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-24118","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/24118","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=24118"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/24118\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=24118"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=24118"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=24118"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}