PMPhilip Morris International Inc

Philip Morris International sells tobacco outside the United States and is moving smokers to heated devices.

The classic cigarette business is remarkably durable: demand barely tracks the economy, volumes decline slowly, and revenue grows on price — a smoker absorbs an increase better than the buyer of almost any other product. That produces steady cash flow and a high dividend yield.

The strategic bet is the shift to smoke-free products, above all the IQOS heated tobacco system. It already supplies a substantial share of revenue, grows faster than cigarettes and carries a higher margin. The point is to keep the smoker inside the company when he gives up cigarettes rather than lose him.

The risks are regulatory and currency-related. Rules on advertising, flavours and device sales differ by country and change; revenue is almost entirely international, so a strong dollar directly reduces it in the accounts. The company pays a high dividend, which is why the stock is held.