Cigarette maker Philip Morris International (NYSE: PM) has seen its shares go precisely nowhere since being spun off from its parent Altria (NYSE: MO) in early 2008. Well, that's not quite true. They did drop with the rest of the market in late 2008 and early 2009 and have since recovered to end up essentially where they began.

In the spinoff, Altria kept the U.S. market and ancillary businesses and Philip Morris got the international cigarette market. With the amount that people smoke and the No. 1 brand in the world in Marlboro, you'd think that would be a good deal for Philip Morris. That may be true, but so far it hasn't been reflected in the share price. However, its dividend has been excellent and currently sits at 4.7%.

Given that, what should investors do? Here's a quick look at some arguments for the three different possibilities.

Buy:

  • Getting paid to own: The dividend is very nice, is rock solid given the billions of dollars of free cash the company generates, and has been boosted twice already. Plus, the company has bought back a net 250 million shares, about 12% of the beginning share count. So each share remaining owns a bigger slice of the company.
  • Pricing power: Cigarette taxes are a favorite revenue source for governments the world over, which Philip Morris passes on to its customers through increased prices. Plus, the company implements its own price increases.

Sell:

  • Evil company: This is the ultimate sin stock, taking advantage of the ability to addict people to a self-damaging product. It's not a matter of making money in the market, it's a matter of doing the right thing and not owning it.
  • Lawsuit risk: Altria, Reynolds American (NYSE: RAI), and Lorillard (NYSE: LO) are paying billions of dollars in settlements as a result of the massive lawsuit against them several years ago. With the Europeans moving toward austerity measures, the chance that Philip Morris will have to do the same has gone up significantly.

Hold:

  • Inflation protection: 100% of its revenue is foreign, but it reports in U.S. dollars. Therefore, it makes a good hedge against inflation of the U.S. dollar.
  • Steady dividend and recent moves: If you bought in the $40s, moving back to $50 or so isn't a large enough move to "take profits." And the dividend yield from lower-priced purchases is even higher than the current 4.6%.

The final call:
For Philip Morris, I come firmly down on the side of buying. The dividend is good and stable; the pricing power is strong; the loyalty of customers to the No. 1 brand is outstanding. I've written before, here and here, outlining several other reasons I think Philip Morris makes a good investment and that hasn't changed even with the stock price's move back up out of the $40s. And while I don't go out and indulge in the sin of this particular stock -- smoking -- I also don't believe that investing is the best way to make a moral statement.