NEW YORK, NY--(Marketwire -07/25/12)- With interest rates and Treasury bond yields near record lows long term investors have looked to high yielding companies with strong earnings. Tobacco companies hold the reputation of having some of the safest dividends in the market as during the last great recession, which saw many companies slash dividends, the tobacco companies' yields remained intact. Five Star Equities examines the outlook for companies in the Cigarettes Industry and provides equity research on Reynolds American, Inc. (RAI) and Lorillard Inc. (LO).
Altria Group, Reynolds American, Lorillard, and Phillip Morris International are the four cigarette companies listed in the S&P 500. The average dividend yield for the four companies, approximately 4.5 percent, is more than double the S&P 500's average dividend yield of 2.1 percent.
Cigarette companies in recent years have benefited from strong demand in Asia. Despite the current economic slowdown, tobacco sales in China during the first six months of the year rose 2.81 percent to 1.31 trillion cigarettes from a year ago, recent data from the State Tobacco Monopoly Administration showed. During that period tobacco imports from China total $1.25 billion. A report released in May by the Ministry of Health showed that China has more than 300 million smokers.
Five Star Equities releases regular market updates on the Cigarettes Industry so investors can stay ahead of the crowd and make the best investment decisions to maximize their returns. Take a few minutes to register with us free at www.FiveStarEquities.com and get exclusive access to our numerous stock reports and industry newsletters.
Reynolds American recently announced that their board of directors declared a quarterly cash dividend of $0.59 per share ($2.36 per share annualized). The company's policy is to return about 80 percent of the company's current-year net income to shareholders in the form of dividends. Reynolds American increased its dividend 5.4 percent in May 2012.
Lorillard offers investors an annual dividend of $6.20 per share for a yield of around 4.55 percent. Lorillard, the third largest manufacturer of cigarettes in the United States, announced that it will release second quarter results on Wednesday, July 25, 2012. Shares of the company are up nearly 20 percent year-to-date.
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- Reynolds American
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