While many companies offer reliable dividend yields, Philip Morris International (PM) has stood out for its impressive year-to-date capital gains and consistent dividend payments. This combination has solidified its position as one of the hottest dividend plays of the year.

PMI stock has jumped 51.1% year-to-date, significantly outperforming the broader market. For comparison, the S&P 500 Index ($SPX) is up about 0.4% over the same period. This impressive performance highlights the company’s solid fundamentals and suggests even more growth potential ahead.

The tobacco giant is benefiting from its growing product volumes, strong demand for smoke-free alternatives, and currency hedging strategies. These factors have boosted earnings and positioned the company to keep returning significant cash to shareholders. With reliable cash flow, steady dividend growth, and solid long-term potential, Philip Morris International is one of the top income-generating investments of the year.

PMI’s Dividend Legacy Continues to Impress

PMI has a long track record of reliable and growing dividend payouts. In 2024, the tobacco company hiked its quarterly dividend by 3.8%, resulting in an annualized payout of $5.40 per share. This reflects a forward dividend yield of about 3%.

Overall, the company has increased its dividend for 17 consecutive years. Last year alone, PMI returned approximately $8.2 billion to investors in the form of dividends. With its business fundamentals remaining strong, that figure is poised to grow further in 2025 and beyond.

Phillip Morris continues to benefit from the rapid expansion of its smoke-free product segment. Moreover, strong margin expansion will support its bottom line and cash flows, enabling the company to return higher cash to its shareholders.

Philip Morris Will Continue Growing Its Dividend

Philip Morris will continue to reward investors with steady dividend growth. The company kicked off 2025 on a high note, delivering double-digit gains in organic net revenue and adjusted earnings per share (EPS).

A major driver behind this growth is Philip Morris’ expanding smoke-free segment. This division is booming, with shipment volumes soaring by over 14% year-on-year in Q1 and organic net revenue up 20%. Furthermore, the division reported a 33% jump in gross profit, reflecting solid growth across all three smoke-free categories.

Leading the charge are products like ZYN, which saw rapid growth, and IQOS, which continues to benefit from increased volumes and operational efficiencies.

Notably, the smoke-free products now contribute about 44% of the company’s total gross profit. Philip Morris is leveraging its multi-category approach to tap into new growth opportunities globally. IQOS maintained solid growth in key markets like Japan and Europe. Moreover, the outlook remains strong, with double-digit growth expected to continue throughout the year.

ZYN’s performance in the U.S. has been impressive, with shipments jumping 53% year-over-year. This surge was fueled by robust demand and an early ramp-up in production capacity, which allowed the company to replenish inventories more quickly than planned. Internationally, nicotine pouch volumes also climbed 53%, highlighting the category’s rapid global expansion.

The company’s e-vapor segment, led by VEEV, is also growing rapidly. Shipments more than doubled compared to last year in Q1, supported by expanding distribution and sales efforts in Europe, which helped improve gross margins.

Even Philip Morris’ traditional combustible tobacco products showed resilience. Despite some headwinds from higher volumes in lower-margin markets, volume growth combined with strong pricing and cost controls delivered solid results.

All these factors together put Philip Morris in a solid position to deliver solid organic growth, expand margins, and report higher earnings.

Looking ahead, PMI forecasts continued double-digit growth in adjusted EPS, which bodes well for an increase in dividends in 2025.

Conclusion

With a more-than-50% stock surge, consistent dividend hikes, and impressive growth in its smoke-free product segment, PMI is delivering both income and capital appreciation to investors, which makes it one of the hottest dividend plays of the year.

While Wall Street analysts have a “Moderate Buy” consensus rating on Phillip Morris stock, its strong fundamentals, including a diversified product portfolio, solid earnings, and robust cash flow, position it well to sustain and grow its dividend in the years ahead.