Began buying the old "MO" in the midst of all the lawsuits!! My cost, after all the spin-offs etc. is MO-10 bucks, KFT-14 bucks and PM-22 bucks. Now when you factor in the dividends at those prices, we are talking great return!! Am not a hog, but investing in quality and dividend will win out in the long run!!
In terms of total return MO will do just fine. Tobacco companies still have something that many other businesses lack. Namely pricing power in excess of inflation...even as the number of smokers continues to decline. Being 54 years old living in Alberta,Canada...I remember my mother buying cigs in 1965 for 35 cents a pack. Fortunately she finally quit 25 years ago when they cost $1.50 a pack. These days the going rate is $11 a pack. I have watched smokers pay $14 to buy a pack from cigarette machines in the local bars and casinos.
Most American states charge nowhere near the prices charged in Canada or Europe. Governments continue to slap more sin taxes on the tobacco products. Compared to the absolute amount of tax increases...tobacco companies price increases look small. Americans can expect to pay alot more for smokes in the not distant future. And through it all...higher taxes, higher inflation, lower cigarette volumes...American tobacco will keep ratcheting up their prices to account for these factors. And those remaining smokers will keep paying ever escalating prices.
MO is nothing more than a shell after spin offs, PM spin off was great management decision but MO has very little direction to go but down IMO unless management uses existing cash flow to buy additional product lines.