Philip Morris International (NYSE:PM) and Verizon (NYSE:VZ) are usually considered slow-growth income plays for conservative investors. PMI is the second largest publicly traded tobacco company in the world, and Verizon is the top wireless service provider and second largest wireline service provider in the United States.

Those wide moats keep many potential rivals at bay, and both stocks pay solid dividends. But is one of these stocks a better buy at current prices? Let's examine their growth rates, valuations, and potential headwinds to find out.

A man paints a stock chart on a brick wall.

Source: Getty Images.

How fast is PMI growing?

PMI was spun off of Altria (NYSE:MO) back in 2008. It focused on selling Philip Morris tobacco products in higher-growth overseas markets, while Altria remained in the U.S. market. PMI's revenue (excluding excise taxes) fell 0.4% in fiscal 2016.

Packs of Marlboro cigarettes.

PMI's flagship Marlboro brand. Source: Pixabay,

But on a constant currency basis, its revenue rose 4.4% -- which highlights the problem with generating all its revenues overseas while reporting in U.S. dollars.

Sales across all its regions rose after excluding currency impacts, with Asia and Latin America leading the way. Its adjusted earnings only rose 1.4% as reported, but grew 11.8% on a constant currency basis.

For the current year, PMI expects its revenue to rise 7% and for its earnings to grow 9% to 12% -- after excluding excise taxes, currency impacts, and acquisitions. Unlike Altria, PMI has suspended buybacks until its currency headwinds wane, so its earnings growth is entirely driven by sales growth, price hikes, and better cost controls.

But looking ahead, PMI faces mounting pressure to make a big acquisition (likely Altria) soon to counter British American Tobacco's recent purchase of Reynolds American -- which made it the biggest tobacco company in the world earlier this year.

How fast is Verizon growing?

Verizon emerged from the break-up of the "old" AT&T (NYSE:T) in the 1980s after Bell Atlantic merged with several of the other "Baby Bells". It founded Verizon Wireless as a joint venture with Vodafone in 1999, then acquired Vodafone's stake for a whopping $130 billion in 2014. Over the past two years, Verizon aggressively expanded its presence in the internet content space with the acquisitions of AOL and Yahoo's internet business.

A woman uses an iPhone.

Source: Pixabay.

Verizon's revenue fell 4.3% as reported in 2016. Excluding the impact of divested landline businesses and AOL, total operating revenues fell 2.4%. Non-GAAP earnings declined 3%.

Those declines reflect Verizon's slowing growth in wireless subscribers, tougher price competition from unlimited plans, and the ongoing expansion of its digital ecosystem.

Like AT&T, Verizon believes that the expansion of "sponsored data" -- or streaming content that doesn't count toward data caps -- can lock in more subscribers while generating additional revenue streams. But for the current year, analysts still expect Verizon's revenue and earnings to respectively dip 1% and 2%.

Comparing the valuations and dividends

Philip Morris International rallied nearly 30% this year, which boosted its trailing P/E to 26 -- compared to the industry average of 14 for tobacco companies. Its forward P/E of 22 only looks slightly cheaper.

Yet investors shunned Verizon, which stumbled 10% this year due to concerns about its stagnant growth and costly, debt-fueled expansion strategies. But the stock now trades at 12 times earnings, versus the industry average of 22 for telcos. Its forward P/E of 13 also looks fairly cheap.

PMI has hiked its dividend every year after splitting with Altria, and currently pays a forward yield of 3.6%. That dividend used up 92% of its earnings over the past 12 months.

Verizon raised its dividend annually for a decade, and it pays a forward yield of 4.8%. That dividend is supported by a lower payout ratio of 59%.

The winner: Verizon

I once owned both PMI and Verizon as income investments, but I only hold Verizon today. PMI looks pricey relative to its industry peers and growth potential, its dividend is lower, and British American Tobacco represents a looming threat to both PMI and Altria. Unpredictable currency headwinds could also turn entire regions (like Latin America) into dead weights on its overall growth.

Verizon has anemic top and bottom line growth, but the aging telco is evolving with its various investments in digital media, connected cars, and the Internet of Things. Those investments won't transform Verizon overnight, but the stock's high dividend and low valuation should limit its downside potential.

Leo Sun owns shares of AT&T; and Verizon Communications. The Motley Fool owns shares of and recommends Verizon Communications. The Motley Fool has a disclosure policy.