While Altria has looked outside the company to diversify and cushion itself from the decline in cigarette sales, Philip Morris is pursuing more of an in-house strategy.
The company -- which sells many of the same brands as Altria but outside the U.S. -- has pinned its hopes on smoke-free products, including heat-not-burn (HNB) tobacco products and oral nicotine pouches. Its primary offerings in this category are the devices and cartridges sold under its Iqos (widely believed to be an acronym for "I Quit Original Smoking") brand and Zyn nicotine pouches.
While the HNB process is similar to the one used by vaporizers and e-cigarettes, devices such as Iqos use tobacco rather than the e-liquid made for vaporizers. By staying focused on tobacco, Philip Morris is leveraging the same supply chain for Iqos that it uses for traditional cigarettes, while also enjoying attractive profit margins on Iqos cartridge sales.
The company claims that HNB devices are safer than regular cigarettes because they don't burn tobacco. However, the science is still being debated, and the Food and Drug Administration (FDA) has not concluded that HNB devices are safer than cigarettes.
Nonetheless, the strategy has been successful. More than 40% of the company's revenue now comes from smoke-free products, and Iqos is gaining market share in countries where it's available. Philip Morris's 2022 acquisition of Swedish Match for $16 billion has also been a success thanks to the popular Zyn chewable nicotine pouch. In 2025, sales of nicotine pouches, primarily Zyn, jumped 37% to 879.6 million cans.
After finding success with Iqos internationally, Philip Morris paid $2.7 billion to acquire the rights from Altria to sell the product line in the U.S. It launched the product in Austin, Texas, in March 2025. As of January 2026, the product is only available in Austin and South Florida.
Philip Morris posted a roughly 1.5% drop in cigarette sales volume during 2025. However, its sales volume of heated tobacco units (HTUs) rose 112% in the same period, indicating that devices such as the Iqos have strong growth potential.
As a dividend stock, Philip Morris does not disappoint. Since its split from Altria in 2008, the company has raised its dividend every year, and its dividend has increased by 220% as of February 2026. The stock also offers a healthy dividend yield of over 3%. If its history as part of Altria were included, it would qualify as another Dividend King.
