2 Dividend Stocks Worth Buying More of in 2026: Philip Morris & Nintendo Deep Dive
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- Philip Morris International (NYSE: PM) generated $16.9 billion in smoke-free revenue in 2025 — up 15% year-over-year — now representing over 40% of total sales, signaling a genuine business transformation that analysts say the market is underpricing.
- PM has raised its dividend for 18 consecutive years; the current quarterly dividend of $1.47/share yields roughly 3.8%, with cumulative payout growth of 44% over the last decade.
- Nintendo (OTC: NTDOY) ties its dividend directly to earnings at roughly 60% of consolidated profits, meaning the Switch 2 launch could materially lift future payouts for patient investors watching this market trend.
- The Morningstar US Dividend Growth Index outperformed the broader US market by more than 5 percentage points through February 2026 — data that suggests dividend-oriented equities are worth researching as a portfolio diversifier in volatile conditions.
What Happened
Two well-known companies are drawing fresh attention from dividend-focused investors in April 2026: Philip Morris International (NYSE: PM) and Nintendo (OTC: NTDOY). Both are navigating major business transitions — and both continue to reward shareholders with growing dividend payments even as their core businesses evolve.
Philip Morris, long associated with traditional cigarettes, has been aggressively reinventing itself as a smoke-free company. In 2025, the company generated $16.9 billion in smoke-free revenue — up 15% year-over-year — and that category now accounts for over 40% of total company sales. In Q1 2026, PM posted earnings per share (EPS, or profit divided by the number of shares outstanding) of $1.96 on revenue of $10.15 billion, beating Wall Street's expectations. Smoke-free product volume reached 47 billion units, up 9.1% year-over-year, with e-vapor shipments surging 95%.
Meanwhile, Nintendo is in the middle of a console generation transition. The Nintendo Switch 2 is expected to drive a significant earnings boost for the Japanese gaming giant, which ties its dividend directly to earnings performance — roughly 60% of profits are returned to shareholders. A successful Switch 2 launch could lift future dividend payouts materially.
Both companies are operating in a broader market environment where income-generating equities are gaining momentum. According to Morningstar data, the US Dividend Growth Index outperformed the broader US Market Index by more than 5 percentage points through February 2026, reflecting a notable rotation into dividend stocks amid market volatility — a market trend that investors are watching closely heading into the rest of 2026.
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What the Data Tells Us
That rotation into dividend equities is more than a passing fashion — the underlying fundamentals of PM and NTDOY offer a compelling case for why this investment research goes beyond surface-level yield chasing.
Think of dividend stocks like a rental property. You collect regular income (rent, or in this case dividends) while hoping the property's value also rises over time. The critical question isn't just "how much income today?" — it's "will that income keep growing?" That's the lens this stock analysis applies to both companies.
For Philip Morris, the dividend track record is striking. The company has raised its quarterly dividend for 18 consecutive years. The current quarterly payout stands at $1.47 per share, yielding approximately 3.8% annually — meaning for every $100 invested, you'd collect roughly $3.80 per year in dividends. Over the last decade, that payout has grown 44% cumulatively, a compounding income story that long-term investors find compelling.
What makes PM's dividend especially durable? The smoke-free expansion. The company now operates smoke-free products across 108 markets globally, with 26 of those markets offering all three product categories — heated tobacco, e-vapor, and modern oral nicotine — up from just 9 markets in FY2023. For FY2026, PM has guided for EPS of $8.36–$8.51, in line with the consensus estimate of $8.37, with smoke-free in-market sales projected to grow at a high-single-digit rate.
Motley Fool analysts have noted that PM shares remain roughly 18.5% off all-time highs despite this acceleration, arguing the market is "underpricing the smoke-free transformation." Seeking Alpha commentary echoes this view, pointing to the company's expanding global footprint and category diversification as structural long-term growth drivers worth researching further.
Nintendo presents a different investment research angle. Rather than a fixed dividend, Nintendo's interim policy targets 33% of consolidated operating profit, with an overall goal of returning roughly 60% of earnings to shareholders. The current NTDOY yield sits at approximately 2.1%, supported by a conservative payout ratio near 37% (meaning the company pays out only 37 cents for every dollar it earns — leaving a wide buffer to grow or weather a down year). The Switch 2 launch is the critical near-term catalyst; investors are watching whether hardware momentum translates into the kind of software attach rates (the number of games sold per console) that historically drive Nintendo's most profitable revenue stream.
EBC Financial Group analysts offered a useful framework in their 2026 outlook: "The best dividend stocks are not simply the highest-yielding ones — they are companies that can sustain payouts, grow earnings, and avoid turning income into a value trap." A value trap is when a stock looks attractively priced but keeps declining, eroding any income gains. Both PM and NTDOY score well on sustainability metrics precisely because their dividends are backed by real, growing earnings — a core principle in any rigorous sector analysis.
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Key Companies and Supply Chain
Building on that sector analysis, it's worth mapping the broader competitive landscape and supply chain context for each name investors are watching.
Philip Morris International (NYSE: PM)
PM's supply chain spans tobacco leaf sourcing, heated tobacco unit (HTU) manufacturing, and e-vapor device production — categories requiring entirely different logistics than traditional cigarettes. Its IQOS heated tobacco system is manufactured at facilities across Europe and Asia, and the company has been investing heavily in production capacity to meet rising global demand. The key supply chain variable to monitor is gross margin (profit after production costs) as PM scales these new categories into emerging markets. PM is currently the dominant player in heated tobacco globally, a category with significant barriers to entry.
Nintendo Co. (OTC: NTDOY)
Nintendo's supply chain centers on semiconductor components for its consoles, primarily assembled in Vietnam and other regions. The Switch 2 launch will stress-test this supply chain at a time when global chip availability remains a variable. For stock analysis purposes, the most important metric to track is software revenue per user — Nintendo's recurring, high-margin business that makes its earnings more durable than hardware sales alone suggest.
Verizon Communications (NYSE: VZ)
With a 5.8% yield and roughly 50% payout ratio, Verizon leads high-yield dividend rankings. Its supply chain involves network infrastructure, spectrum licensing, and device partnerships. For investors seeking maximum current income, VZ remains a benchmark — though its earnings growth trajectory is more limited than PM or NTDOY.
Enbridge (NYSE: ENB)
Enbridge's 5.4% yield and 31 consecutive years of dividend hikes make it a gold standard in dividend growth investing. As a pipeline and energy infrastructure company, its supply chain is largely fixed assets — pipelines and storage terminals — generating stable, regulated cash flows. ENB is worth researching as a complement to PM and NTDOY for investors who want high current yield alongside growth-oriented income plays.
What Should You Do? 3 Action Steps
Before making any capital allocation decisions, investors are watching one key milestone: when smoke-free revenue crosses 50% of Philip Morris's total sales. That threshold would confirm a complete business model transformation — and may be the catalyst that closes the 18.5% gap to all-time highs. PM's quarterly earnings releases (available at investor.pm.com) provide the clearest window into this trend. Making this a regular part of your investment research routine helps you stay ahead of the narrative shift.
Because NTDOY's dividend is directly tied to earnings, it's worth building a simple scenario model before investing. Research analyst consensus estimates for Switch 2 unit sales on platforms like Seeking Alpha or Yahoo Finance, then estimate what a 10%, 20%, or 30% earnings uplift would mean for future dividend payouts given Nintendo's ~60% payout policy. This kind of forward-looking stock analysis helps investors avoid being surprised by dividend variability in any given fiscal year — and helps set realistic income expectations.
Don't evaluate dividend stocks on yield alone. A useful sector analysis framework adds the current dividend yield to the historical annual dividend growth rate to estimate total income potential. PM's ~3.8% yield plus its approximate 4% annual dividend growth history suggests a potential total income return near 7.8% annually — before share price appreciation. Compare that to NTDOY's lower yield but higher potential earnings growth from the Switch 2 cycle, and to Verizon's higher static yield with slower growth. Mapping this across multiple market trends and income timelines helps investors build a more balanced dividend portfolio rather than simply chasing the highest number on a screener.
Frequently Asked Questions
Is Philip Morris International (PM) a good dividend stock to buy in 2026 despite its tobacco business?
Data suggests PM is worth researching seriously in 2026. The company has raised its dividend for 18 consecutive years, posted Q1 2026 EPS of $1.96 beating estimates, and now derives over 40% of revenue from smoke-free products — a transformation analysts argue is being underpriced by the market. The current ~3.8% yield is well-covered by earnings, with FY2026 EPS guidance of $8.36–$8.51. Regulatory risk in nicotine markets remains a real consideration every investor should evaluate independently before allocating capital.
How does Nintendo's dividend payout policy work and what could the Switch 2 mean for NTDOY income investors?
Nintendo's dividend is earnings-linked rather than fixed. The company targets an overall payout of roughly 60% of consolidated profits, with an interim policy based on 33% of operating profit. This means dividends rise when Nintendo earns more — and could decline in a down year. The Switch 2 launch is widely expected to materially lift earnings in coming fiscal years, which would translate directly into higher dividend payouts for NTDOY holders. Investors are watching early Switch 2 sales data as the clearest forward indicator for dividend growth potential.
What is a dividend value trap and how do you avoid it when buying high-yield stocks in 2026?
A dividend value trap occurs when a stock offers a high yield but the underlying business is deteriorating — the stock price falls faster than dividends accumulate, resulting in a net loss. EBC Financial Group analysts caution that the best dividend stocks in 2026 are not the highest-yielding ones, but those that "can sustain payouts, grow earnings, and avoid turning income into a value trap." Key warning signs include payout ratios above 80% (meaning little earnings buffer), declining revenue, or rising debt. Both PM and NTDOY carry payout ratios well below those danger thresholds, which is why they appear frequently in defensive investment research.
How do Philip Morris and Nintendo compare to Verizon and Enbridge for dividend investors building a portfolio in 2026?
Verizon (VZ) yields 5.8% and Enbridge (ENB) yields 5.4% with 31 consecutive years of dividend hikes — both offer higher current income than PM (~3.8%) or NTDOY (~2.1%). However, PM and NTDOY bring meaningful dividend growth potential tied to active business transformation, while VZ and ENB are more mature, lower-growth income plays. A complete sector analysis suggests all four are worth researching for different portfolio roles: VZ and ENB for maximum current yield, PM and NTDOY for yield-plus-growth total return over a longer time horizon.
Why are dividend stocks outperforming the broader market in early 2026 and is this trend likely to continue?
The Morningstar US Dividend Growth Index outperformed the broader US Market Index by more than 5 percentage points through February 2026, reflecting a rotation into defensive, income-generating equities. iShares analysts noted in their 2026 outlook that dividend-paying stocks can serve as "potential diversifiers in an AI-led equity sell-off," with lower earnings volatility helping to balance portfolios during turbulent periods. Whether this market trend continues depends heavily on broader macro conditions — interest rate direction, AI sector sentiment, and corporate earnings visibility. Investors are watching these signals closely, but historical data suggests dividend growers tend to hold up better than pure growth stocks during periods of elevated uncertainty.
Disclaimer: This article is for educational and informational purposes only. It does not constitute financial advice, a recommendation, or an endorsement of any security. Always do your own research and consult a licensed financial advisor before making investment decisions.
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