Nowadays companies across the gamut of industries pay
shareholder dividends. Tobacco firms pay some of the juiciest
yield. One such issue isLorillard (
With a lineage dating back to 1760, the Greensboro, N.C.-based
firm is the third biggest maker of cigarettes in the U.S. Its
flagship Newport brand is the nation's second best seller.
Lorillard has a policy to return 70% to 75% of its net income
to stockholders as dividends. It currently pays 55 cents per
quarter. The company's quarterly dividend has jumped by 67% in
the past three years. It last announced a hike in February.
On an annual basis, Lorillard pays $2.20 a share, which works
out to a yield of about 4.9% -- the fourth biggest among its
peers. But the stock's yield is nearly twice that of the S&P
Besides returning cash to shareholders via dividends,
Lorillard has also bought back billions of dollars of its own
stock in recent years. Lorillard added $500 million to an
existing share repurchase program in May, doubling the original
The company's earnings slipped in 2008, but have grown by
single or double-digits each year since. Lorillard has an
Earnings Stability Factor of 2, indicating a rock-steady stream
of profits. Analysts polled by Thomson Reuters see earnings per
share rising 11% this year and 12% in 2014.
In the latest two quarters, Lorillard's profit grew 14% and
11%, respectively, thanks to higher average selling prices. The
company has steadily increased its retail market share to 14%
from 10% in 2010.
One area of growth for Lorillard stems from electronic or
e-cigarettes. In April 2012, Lorillard bought e-cigarette leader
blu eCigs for $135 million in cash. A Wells Fargo report from
August 2012 has said that demand for e-cigarettes could overtake
that of traditional cigarettes over the next 10 years.