Altria Shares Take a Hit as Philip Morris Dividends Grow

Altria Shares Take a Hit as Philip Morris Dividends Grow

Philip Morris International’s quarterly dividend is up while shares of Altria trend down over merger talks and the growing concern over e-cigarettes and vaping.

On Sept. 11, 2019, Philip Morris International announced that its board had increased the tobacco company’s dividend by 2.6 percent, bringing the annualized share to $4.68. The new quarterly is now set at $1.17, up from the previous $1.14, payable to holders of record Sept. 25.

This week, Altria shares trended downward after Piper Jaffray analyst Michael Lavery downgraded the company. It was Altria’s minority stake in e-cigarette manufacturer JUUL Labs that sparked the downgrade as JUUL received a warning letter this week from the U.S. Food and Drug Administration (FDA) after being accused of misusing modified risk claims in its marketing [read more here]. Lavery voiced concerns over JUUL’s ability to produce the earnings Altria expected.

JUUL’s under-performance could have a negative impact on the merger between Altria and Philip Morris International, which was first mentioned in August 2019 [read more here]. It was then when Altria revealed merger talks were occurring between it and Philip Morris International, a move that would bring the two companies together following a split back in 2008. Following the split, Altria had focused on the U.S. market while Philip Morris International focused its efforts on international markets. Both have explored non-combustible tobacco products as sales for traditional tobacco products like cigarettes have been in decline.

Lavery cut Altria to natural from overweight and lowered the price target on the stock from $64 down to $49. Shares of Philip Morris were at $74.89, up 0.5 percent. Altria shares were at $44.62, up 1 percent.

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