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Buy Philip Morris for the dividend, Goldman says

Marlboro brand cigarettes
Daniel Acker | Bloomberg | Getty Images

Investors should buy Philip Morris International shares on the prospect of faster earnings growth and a dividend increase, according to Goldman Sachs, which raised its rating on the company to buy from neutral and added Philip Morris to its conviction buy list.

"We upgrade PM ... on accelerating EPS momentum, increased confidence in iQos [e-cigarettes] contribution long term and improving capital allocation ahead," Goldman's Judy Hong wrote in a note to clients Monday.

"We expect PM to raise the dividend in mid-September and provide additional details around its next generation products (NGP) strategy at the analyst meeting on Sept. 29, both of which are likely to be positive catalysts in the near term."

The tobacco stock is up 11 percent this year as of Friday's close and currently has a 4 percent dividend yield.