Recent Purchase – PM

The market dropped close to 1.5% yesterday (3/6/2015) and this caused almost all the stocks to drop irrespective of the sector or size. I have been eyeing to add to my position in Philip Morris (PM) for a while now and was waiting for the price to hit 80 and it did on Friday.

I purchased 19 shares of PM at $80.35 on 3/6/2015. With commission, the total cost comes to $1,533.65. With a quarterly dividend of $1.00/share, the yield comes to 4.96% and this purchase adds $76.00 to my forward annual dividends. The current price was below my average price and hence also enabled me to average down on the stock.

PM stock is under lot of pressure primarily due to the strength in dollar.  PM does all its business outside US and therefore a strong dollar will negatively affect its earnings. But I feel that in spite of this, the stock is a good investment for the long term and pays a nice dividend while it rebounds. My previous purchases in PM are listed below.

As you can see, the stock has been dead money since my initial purchase and was below my average price, but as I mentioned I am hoping the stock is a good investment for the long term as the currency issues go away.

Morningstar has a fair value of $92.00 for the stock and it is rated 4 stars.

While I have been making weekly purchases regularly, this is my first big purchase for the year. I hope the market continues to be under pressure thus providing some good buying opportunities.

The portfolio page will be updated soon to reflect this purchase.

Disclosure: Long PM

Image courtesy: http://www.pmi.com/

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12 thoughts on “Recent Purchase – PM

  1. DGJ,

    We are absolutely on the same page here. I love the defensive nature of PM along with its awesome yield. This should give you many years of solid income. Also it has lagged MO by quite a bit in recent years so I think it continues to be a smart alternative to chasing MO.

    MDP

    • That’s true. MO has had a great run in the last couple of years. With this purchase, I have equal weight in MO and PM and I am hoping PM bounces back in the long term while growing their dividends.
      Thanks for stopping by.

  2. Loving this purchase, I nearly opened a position this week but looking forward PM could be my next purchase. I think it would be a nice compliment to my position in MO.

  3. DGJ,

    Excellent pickup. We bought a little PM yesterday as well. We can ride along and wait for investors to remember that the USD has its own set of issues and perhaps the currency issue will be a huge tailwind to propel PM dividend yield back closer to 4%. All the best.

    FD

  4. PM has eluded my portfolio for a long time. I cant seem to wrap my head around their financials – but its just my lack of trying. Its been popping up again on my screeners and I need to double down and try to understand it better. Thanks for sharing your thoughts. The 5% yields are tempting.

    R2R

    • R2R,
      The last couple of years, the numbers have not been favor of PM. They have increased their debt as the currently headwinds have been eating at their earnings. Looking forward to having you as a fellow shareholder soon.
      Thanks for stopping by.

  5. Nice purchase. I will be adding to my shares of PM next week to catch the dividend. I believe it offers a good entry point, although it may trek lower depending on the US Dollar. I will be content with the 5% and I believe they will be able to continue maintaining the dividend with their large cash flow.

    • Thanks Young. The risk of PM going lower is still there as the US Dollar continues to get stronger. But this looked to be a nice point for me to add to PM and also average down on my price. Will continue to monitor the stock and if it goes down further, I might consider adding to it.
      DGJ

  6. After I sold stocks to buy my house, KO and PM were the two stocks that I chose to keep feeling the strongest about them. I just added $1600 of PM to my portfolio this morning @ $77.50.

    WE

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