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6 Big-Dividend Stocks to Light Up Your Portfolio (Update2)

3. Philip Morris International (PM)

Company profile: Philip Morris International, with a $143 billion market value, is the world's second-largest tobacco company, behind only state-owned China National Tobacco, with a 16% market share. It owns seven of the leading 15 international brands, including Marlboro, its flagship.

Investor takeaway: Its shares are up 4.7% this year and have a three-year annualized return of 37%. The stock carries a 3.75% dividend yield, and it had $2.5 billion in cash on the books at year-end.

Philip Morris spent $1 billion to repurchase 14.5 million shares in the fourth quarter and plans to acquire $6 billion in shares this year. Capital Research Global Investors, parent of American Funds, owns 6.6% of the company, the biggest stake of any institutional investor.

Last week, a Florida appeals court overturned an almost $2 million judgment against Philip Morris in a wrongful death suit filed by a smoker's husband. The 4th Circuit Court of Appeal ruled Wednesday that the smoker, who died of lung cancer at age 73, knew years before the suit was filed that smoking endangered her health.

S&P gives it a "strong buy" rating and a $91 price target, a 10% premium to the current price. Analysts give its shares seven "buy" ratings, four "buy holds," eight "holds," and one "weak hold." Its expected to earn $5.29 this year and that that will grow by 11% in 2013.

2. British American Tobacco (BTI)

Company profile: British American, with a market value of $99 billion, is the world's third-biggest tobacco company, selling more than 300 tobacco brands, including Dunhill and Lucky Strike, in 180 countries and is market leader in many with a 19% market share worldwide, excluding China. It has the largest emerging-market exposure of any cigarette seller, a big plus, but it's not a big player in the U.S.

Investor takeaway: British American Tobacco's shares are up 4% this year and have a three-year annualized return of 31%. Over 10 years it has a 20% annualized return. The stock carries a 2.4% dividend yield. Analysts give its shares four "buy" ratings and one "weak hold," according to S&P. It's expected to earn $4.80 per share in 2012.

British Tobacco hit a 52-week high of $100.24 Monday on an intraday basis. Last Thursday, it announced a $2 billion share buyback program for this year and that it will raise its dividend by 11%, in conjunction with fourth quarter earnings. Earnings per share rose 11% in 2011.

1. Imperial Tobacco ( ITYBY)

Company profile: Imperial Tobacco, with a market value of $40 billion, is the world's fourth-largest international tobacco company, excluding privately held China National Tobacco. The U.K.-based company has sales operations in more than 160 countries and is the world leader in the fine-cut tobacco and hand-rolling paper categories, and is also a leading seller of cigars.

Investor takeaway: Imperial Tobacco's shares are up 7% this year, have a three-year annualized return of 22% and a 10-year return of 14%. Its shares have a dividend yield of 5.4%.

U.S. investment house analysts don't follow the stock. Morningstar analysts say that due to the wide price range of its products, "Imperial is well-positioned to exploit the emerging trends of trading up in Eastern Europe and trading down in more mature markets. Along with Lorillard, the stock remains one of the most attractively valued tobacco names in our coverage list."

Economic austerity measures in Europe may hurt sales. Morningstar says "there could be further upside to the stock if it comes into play as an acquisition target," as it would be a good fit with Philip Morris International.

>>To see these stocks in action, visit the 6 Big-Dividend Stocks to Light Up Your Portfolio portfolio on Stockpickr.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.
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