Should Philip Morris Raise Its Dividend?

With all of the global economic strain, many investors are pressuring those companies that can afford it to increase their dividend yield. Nothing says safe and steady like regular large payments to shareholders. If you're invested in the tobacco space, you know that dividend payouts frequently near 100% of earnings. That's why Philip Morris' (NYS: PM) 55% payout ratio seems like a great place to squeeze a little extra yield.

But Philip Morris is more growth-minded than its tobacco company peers, and that cash is better kept in house for expansion, not to mention for funding its $18 billion, three-year share repurchase plan, which I believe will be more impactful to its bottom line than reinvested dividends.

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Austin Smith owns shares of Philip Morris International. The Motley Fool has no positions in the stocks mentioned above. Motley Fool newsletter services recommend Philip Morris International. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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