Philip Morris: healthy earnings - FT.com Looking at its valuation, you might think Philip Morris International did not sell a product with bold health warnings pasted all over it. The stock has returned nearly 85 per cent over two years, driving its free cash flow yield down from 8 per cent to 6 per cent and the dividend yield from 4.5 per cent to 3.6 per cent. The new figures put PMI in range of consumer goods companies such as Coca-Cola, Procter & Gamble, and Kraft, which sell (presumably) non-carcinogenic products and sport dividend yields of about 3 per cent. In recent years, uncertainty may have overridden investors" qualms about providing capital to an industry whose product must decline over time, as its key customers in the emerging world become richer and more health conscious. Buyers have been keen on any stock that provided cash here and now. If the frenzy for yield abates, and the tobacco industry discount comes back, PMI holders are in for a rough ride. To get PMI's yields back to the level of two years ago, the company's share price would have to drop by more than a fifth. But perhaps tobacco companies should not be priced to reflect an inevitable decline. PMI's latest earnings report, published on Thursday, looked healthy. Earnings rose nicely and the organic volume growth was the best in years. And while smokers from Turkey to Indonesia are likely to kick the habit over time, this fact may not differentiate tobacco companies. After all, how confidently can we project what people will be eating and drinking in 20 years - to say nothing of what technologies they will be using or which resource companies will have had their best reserves nationalised? We happen to know what will, at some point, stifle the tobacco companies. That we do not know this about other companies does not mean they will live forever.