Tobacco.org

Vector Group Declares Quarterly Cash Dividend 

-Vector Group Ltd. (NYSE: VGR) today announced that it has declared a regular quarterly cash dividend on its common stock of $0.40 per share. The dividend is payable on December 29, 2008 to holders of record as of December 18, 2008.

Jump to full article »

Philip Morris International (PMI) Declares Regular Quarterly Dividend of $0.54 Per Share 

The Board of Directors of Philip Morris International Inc. (NYSE / Euronext Paris: PM) today declared a regular quarterly dividend of $0.54 per common share, payable on January 9, 2009, to stockholders of record as of December 26, 2008. The ex-dividend date is December 23, 2008.

Jump to full article »

Fitch: No Rating Action on Altria v. Good U.S. Supreme Court Ruling 

While the ruling may negatively affect Altria Group, Inc. (Altria) and the tobacco industry, Fitch Ratings assesses the credit risk from legal rulings in the context of probability of adverse monetary judgment in the near- to intermediate-term. At this stage, it is too early to determine if, as a result of the Supreme Court's ruling, any adverse monetary judgment is likely to be entered against tobacco industry participants which could impact their credit profiles.

Jump to full article »

High Yield Safe Haven: New Global Tobacco Index 

In stark contrast to my previous article on socially responsible and green exchange-traded investment vehicles, the accompanying table (click to enlarge) presents the Top 10 companies by market cap and statistics for the ETF Innovators (ETFI) Global Tobacco Index, which easily outpaced the overall market and benchmark ETFs over the last year.

The Top 25 Rated companies managed to post a gain of 1.5% on a total return basis in the past year, thanks to an average dividend yield of 6.3%. All benchmark ETFs posted losses over the past year on a total return basis, including Consumer Staples SPDR (XLP) (-17.5%), Claymore/Sabrient Defensive Equity Index (DEF) (-31.5%), Vanguard Consumer Staples (VDC) (-17.3%), and iShares Dow Jones Select Dividend (DVY) (-34%).

The Top 10 companies by market cap will be getting smaller as Altria (MO) is set to close on its acquisition of smokeless tobacco maker UST Inc. (UST) early next year. Companies yielding over 5% among the Top 10 largest include Philip Morris International (PM), British American Tobacco (BTI), Altria, Reynolds American (RAI), and Lorillard (LO).

Jump to full article »

Fitch: No Rating Action on Altria v. Good U.S. Supreme Court Ruling  

While the ruling may negatively affect Altria Group, Inc. (Altria) and the tobacco industry, Fitch Ratings assesses the credit risk from legal rulings in the context of probability of adverse monetary judgment in the near- to intermediate-term. At this stage, it is too early to determine if, as a result of the Supreme Court's ruling, any adverse monetary judgment is likely to be entered against tobacco industry participants which could impact their credit profiles.

Jump to full article »

Sector Snap: Tobacco slides  

Shares of tobacco companies slipped Monday after the Supreme Court decided to allow smokers to sue cigarette makers for the way they promote "light" and "low tar" bran

Jump to full article »

UPDATE 1-Goldman cuts US tobacco sector to neutral  

Goldman Sachs downgraded U.S. tobacco sector to "neutral" from "attractive," saying fundamentals for tobacco companies are likely to weaken in 2009. The deteriorating macro environment and rising unemployment along with a likely federal cigarette excise tax increase will weigh on industry volume and profit next year, analyst Judy Hong said in a note dated Dec. 10.

The analyst estimated a hike of 61 cents per pack in federal excise tax (FET) in March, which could lead to a 7 percent industry-wide volume decline next year.

Jump to full article »

Sin may pay, but Obama is ethical investors' hope 

The combination of recession and efforts to jump-start economies can be an investment headache.

In recessions, vices like tobacco and alcohol win ground among those daring enough to buy shares. But if Barack Obama's plans to invest in clean energy and tighten regulation set a trend, growth plays in worthier sectors may also reward. . . .

Among classic defensive plays, companies focusing on human habits fit that bill squarely.

"People will not stop smoking in recession, they might even smoke more because they are nervous," said professor Andrew Clare, chair in asset management at London Cass Business School.

"Whatever happens people need cigarettes and do not tend to cut back on alcohol," he said.

Amid the fracas of recent months, many investments in classic defensive sectors -- of the type offered by a U.S.-based fund that uses the idea of "vice" as its promotional gimmick -- have fallen less sharply than the broader market.

British firm Imperial Tobacco on November 25 reported an annual adjusted earnings increase of 15 percent, despite smoking bans enforced in Britain and other Western countries.

Jump to full article »

Times are tough, but the rich can still splash out 

It will be interesting to see how much local pension funds will move to increase stakes in British American Tobacco (BAT) now that they can hold the share directly, instead of diluting it with Richemont's luxury interests, or Remgro's banking and other interests.

BAT offers steady sales, global geographic diversity and earnings in pounds - just about everything a fund could want in uncertain times, unless, of course, holding tobacco is against the ethical rules of a fund. But there are risks cigarette companies face, including litigation over health, as has been seen previously.

Sales are also down in the West, proving that high government sin taxes, regulation of smoking and banning of advertising do cut demand. . . .

In this country, BAT has responded to the advertising restrictions by changing the packaging on cigarette boxes. The change is a gradual evolution and creates a talking point among smokers about a brand. It is believed that innovation of the actual cigarette product is the next step in marketing: expect fags that change taste midway through a smoke. . . .

Long-term family investments in tobacco companies such as BAT and Philip Morris International may help put many children and grandchildren through tertiary education, but one wonders if cigarette companies will still be a top investment choice when the next generation goes through its recession.

Jump to full article »

Richemont soars after BAT tobacco spin-off  

Shares in Switzerland's Richemont surged on Tuesday as markets welcomed the group's first trading day as a pure luxury play following the spin off of its stake in British American Tobacco.

Shares in the new Richemont, which is now Europe's second-biggest luxury goods specialist, soared 37 percent to 25.58 Swiss francs when compared with a pro-forma closing price of 18.73 francs.

Richemont reached this closing price through a calculation for its luxury component excluding BAT.

"It is clear that the strategy has been a success," Kepler Capital Markets analyst Jon Cox said.

Ninety percent of the BAT stake will be distributed to shareholders at the beginning of November and the rest will be held in new investment vehicle Reinet Investments.

Jump to full article »

5 Stocks You Can Feel Good About  

But even if you believe in investing in socially responsible companies, you're probably also supporting companies you wouldn't choose on your own -- without even paying attention.

Just for example Tom Gardner, co-advisor of Motley Fool Stock Advisor, recently confided in me (Ilan) that he wouldn't feel comfortable investing his own money in Philip Morris parent company Altria.

Although reasonable people can -- and often do -- disagree about whether a given company is socially responsible, tobacco is one of the few sectors with wide agreement. According to the World Health Organization, tobacco use will kill 1billion people over the next century, and business legends such as Michael Bloomberg, Bill Gates, and (by proxy) Warren Buffett recently pledged $500 million to promote antismoking efforts around the world.

Even so, many of us -- perhaps even you -- are invested in tobacco companies through broad-market index and mutual funds.

If you're invested in an S&P 500 index fund, for example, you're automatically a part owner of Altria, Philip Morris International, Reynolds American, and other companies you might find distasteful.

Jump to full article »

Key Thoughts Going Into DOJ Appellate Argument (PDF) 

Investment conclusion: The DOJ’s tobacco lawsuit has been already largely de-risked in our view – and the industry has already largely “won” the lawsuit because of: (i) Pre-trial rulings that eliminated all claims for health care cost recovery ($289 billion), and (ii) An appellate ruling during trial that removed disgorgement as a potential remedy under Civil RICO ($280 billion). As a result, the practical worst-case scenario on appeal – upholding Judge Gladys Kessler’s ban on Light and Low-tar terminology and mandated “corrective” statements – looks quite manageable. While we would obviously prefer a reversal of the finding that the industry violated Civil RICO, we believe that tobacco litigation would remain manageable if Judge Kessler’s earlier ruling is upheld.

Jump to full article »

• Tobacco Stocks: Not for the Nervous Investor  

Tobacco products, because of their addictive qualities, remain a relatively unscathed market even in uncertain economic times. And with the market ups and downs, these businesses could even see an increase in sales from smoking clientele looking to quell their nerves.

However, the steady cash returns from tobacco stocks come with some tradeoffs:

* They offer limited growth prospects, especially as tobacco customers die off (as smokers tend to suffer greater death rates actuarially than nonsmokers). * These stocks represent investments in what some refer to as a "sin" sector, eschewed by "socially responsible" portfolio managers. * These stocks' companies stand in the crosshairs of some former-customers-turned-angry-plaintiffs as well as tax-hungry legislators. * Anti-smoking forces have been taking aim at retail distribution of cigarettes as well as venues for smoking and advertisements that they claim are targeting youth to replace the base of mature smokers.

These built-in risks, not to mention the currently treacherous stock market, should be enough to compel any investor interested in investing in tobacco stocks to first consider carefully their investment.

Still, if an investor is unbothered by moral arguments against tobacco and is willing to test the roily investment waters, some arguments exist for considering tobacco stocks.

Jump to full article »

Playing Defense at Vanguard Selected Value  

Jim Barrow is investing defensively at Vanguard Selected Value (symbol VASVX). "The consumer is under a great deal of pressure," says Barrow, whose firm runs about three-fourths of the fund's assets. He expects the consumer-related companies in his portion of the fund, such as discounter Family Dollar Stores and tobacco firms Lorillard and Reynolds American, to hold up regardless of economic conditions.

Jump to full article »

Altria safe haven in turbulent market  

Deutsche Bank is touting Altria Group as a safe haven for investors in a turbulent market. Research analyst Mark Greenberg said Altria remains a prodigious generator of free cash-flow

Jump to full article »