5 Dividend Kings in the Tobacco Industry

Tobacco Firms Logos

This article represents tobacco companies that have high dividend yields, strong balance sheet reports and enough free cash flow to support their dividend payout ratios.

Philip Morris International, Inc (PM) is an attractive perspective having an exciting dividend yield of 3.5 per cent. The tobacco company possesses continuous growth in reference to high unit sales and net income.

Tobacco Firms Logos

Logos of major tobacco companies

Particularly in the recent past, Lorillard Inc. (LO)’s stock has performed well and has exceeded the market and opponents alike. The cigarette maker has attractive dividend yield of 4.9 per cent. The company’s high payout ratio and corresponding free cash flows make it a dividend stock with a stated value.

As well, in spite of Reynolds American Inc.‘s (RAI) earnings being downward adjustment, the tobacco firm remains an attractive input as it has dividend yield of 5.5 per cent. Reynolds provides a good record of returning money to its shareholders by means of dividends.

Altria Group (MO) and British American Tobacco (BTI) are the two stocks offering a strong cash flow situation. Altria Group offers dividend yields of 4.9% and British American Tobacco – of 5.8%.

China National Tobacco Co. is the biggest tobacco company in the world in the terms of volume.

Now five dominated tobacco companies in the market are: Altria, British American Tobacco, Imperial Tobacco, Japan Tobacco and Philip Morris International.

Since strict restrictions were enacted regarding tobacco manufacturers, the Tobacco Industry in the U.S. experienced negative consequences. Along with regulations, tobacco industry suffered from law suits. They will continue to create problems to financial situation of the Tobacco Industry.

The three major cigarette makers in the Tobacco Industry in the U.S. are Philip Morris, Reynolds American Inc. and Lorillard.

Key Industry Drivers:

Prices: Raised prices for tobacco products decline consumption among adult people, negatively affecting the industry.

Marketing: monetary assets invested in marketing by cigarette manufacturers are key for their profitability. These assets go to licensed tobacco retailers so they can sell their products in the most visible locations. The chart demonstrates the amount of assets invested by cigarette manufacturers in marketing their products, an amount that is higher than the marketing expenses for junk food and alcohol combined.

Risks: The Tobacco Industry is heavily imposed by taxes and various extra taxes have been suggested for the industry, but have yet to be established. However, despite taxation that can damage the company’s profitability, the company has performed well.

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