Why Philip Morris International (PM) Tops the Low Volatility Stock List in 2025

In a market rattled by trade wars, AI-driven disruptions, and stagflation fears, investors are flocking to low volatility stocks for stability. Philip Morris International (PM) has emerged as a standout candidate, combining defensive characteristics, dividend reliability, and strategic resilience. With a beta of 0.49—nearly half the market’s volatility—PM ranks 7th in the 10 Best Low Volatility Stocks to Buy Now. But is it truly the best? Let’s dissect the data.

Low Volatility: PM’s Defining Strength

PM’s 5-year monthly beta of 0.49 places it among the least volatile stocks in the market. Beta measures sensitivity to broader market movements; a score below 1 means PM moves less than the S&P 500. For context, the S&P 500 Low Volatility Index (which tracks the 100 least volatile stocks) has a beta of 0.7, making PM even less correlated with market swings.

Historical volatility metrics reinforce this stability. As of December 2024, PM’s 30-day historical volatility was 20.15%, while the Cboe Volatility Index (VIX)—a proxy for market fear—hit 32.64% in April 2025, signaling elevated uncertainty. PM’s muted volatility contrasts sharply with the broader market’s turbulence, making it a defensive anchor in portfolios.

Outperforming the Market in Turbulent Times

PM’s low volatility hasn’t come at the cost of returns. As of April 2025:
- YTD Return: 36.81%, vs. the S&P 500’s 10.18%.
- 1-Year Return: 88.27%, vs. the S&P’s 5.19%.

This outperformance is no accident. PM’s focus on smoke-free products (e.g., IQOS heat-not-burn devices and ZYN nicotine pouches) has insulated it from trade wars. While U.S.-China tariffs soared to 145%, PM’s localized production and global supply chain diversification minimized disruptions. The FDA’s January 2025 authorization of all ZYN products in the U.S. further fueled growth, pushing PM’s stock to a 52-week high of $163.08 by April 3.

The Dividend Advantage

PM’s 3.3% dividend yield is a magnet for income investors. The company has grown dividends at a 7.2% CAGR since its 2008 IPO, backed by robust cash flows. With operating margins and cash flow margins exceeding 30%, PM’s profitability fuels both payouts and reinvestment in growth initiatives like its $9.71 billion Q4 2024 revenue (beating estimates by $269.71 million).

How PM Stacks Up Against Peers

While the research doesn’t provide explicit beta data for direct competitors like British American Tobacco (BAT) or the S&P 500 Low Volatility Index, PM’s YTD performance and volatility metrics place it ahead of broader defensive plays. For instance:
- The S&P 500 Low Volatility Index fell 3.7% since February 2025, while PM surged 35%.
- Peers like Caseys General Stores (CASY) and Dollar General (DG)—highlighted as “tariff-proof” stocks—lagged PM’s returns.

The Case Against PM: Valuation and Risks

Critics argue PM’s 23x P/E ratio is premium for a tobacco stock, especially compared to BAT’s lower valuation. However, the premium is justified by its ZYN-driven growth and defensive traits. Longer-term risks include regulatory scrutiny of nicotine products and global health initiatives to reduce smoking. Yet, PM’s pivot to smoke-free alternatives mitigates these risks, positioning it as a leader in the evolving market.

Conclusion: PM’s Place in the Low Volatility Universe

PM is not just a low volatility stock—it’s a high-quality, high-return defensive play. Its 0.49 beta, 36.81% YTD return, and resilience in a VIX-soared market (32.64%) make it a standout choice. While peers and indices like the S&P 500 Low Volatility Index (beta 0.7) offer diversification, PM’s dividend yield, growth catalysts, and insulation from trade wars give it an edge.

For investors seeking stability without sacrificing upside, PM checks all the boxes. As the Federal Reserve warns of “continuous stagflation” and markets remain volatile, PM’s defensive profile and strong fundamentals justify its rank as the best low volatility stock to buy now.

In short, PM’s blend of low volatility, dividend reliability, and strategic foresight makes it a rare gem in today’s turbulent markets.