High-Yield Stocks That Could Wreck Your Retirement: Philip Morris (PM)
Dividend Yield: 3.7%
I could say the same for former Altria international division, Philip Morris International Inc. (NYSE:PM).
Smoking rates, as a general rule, are higher outside of the United States. But they are lower than they used to be, and they are falling … quickly. Most countries have some level of socialized medicine, and treating smoking-related illness is expensive.
Among large European countries, Germany has the highest smoking rate at around 30% of the adult population, according to the World Health Organization. But even in Germany, smoking is in retreat due to stricter bans on where smokers can light up. And even China — the last great hope for the tobacco industry with an estimated 350 million smokers — is clamping down on smoking and is looking to implement a smoking ban in public places this year.
Meanwhile, Phillip Morris International is far from cheap, trading at 21 times forward earnings projections. Yes, it yields 3.7% — a relatively high yield in a broader market that yields only about 2%. But that’s not high enough given very real growth concerns.
I wouldn’t recommend PM for a long-term retirement portfolio.