Despite a seemingly uphill battle over the years for tobacco
companies, they keep finding new ways to generate revenue.
That's good news for dividend investors, since tobacco firms
pay some of the heftiest dividends.
), for instance, has a policy to return 70% to 75% of its net
income to shareholders in the form of quarterly cash dividends.
The Greensboro, N.C.-based company has paid out a dividend of 55
cents a share the past two quarters. That works out to an annual
total of $2.20, or about a 4.4% yield vs. the S&P 500's
2.43%. Its payout is up 77% from early 2009.
The No. 3 U.S. maker of cigarettes under brands such as
Newport, Kent and Maverick has posted annual profit gains between
7% and 18% the past four years. That steady growth helps it
secure a three-year Earnings Stability Factor of 1 and a
five-year factor of 2, on a 0 to 99 scale. That means its EPS
growth is among the steadiest of all companies.
Analysts expect double-digit gains to continue at 12% this
year and 13% the next.
In the third quarter, Lorillard stepped up earnings growth to
15% from Q2. Sales rose 10%, the best growth rate in nine
quarters, boosted by higher average selling prices and higher
unit sales volume.
The company's retail market share increased to 14.9%, driven
by strength in its Newport Menthol brand.
Another avenue of growth Lorillard is pursuing is in the
e-cigarette market. Blu eCigs, which it acquired in April 2012,
reached about a 49% share of that market during the quarter. To
further fuel growth, Lorillard in October bought Skycig, a U.K.
The stock sits 6% below its Nov. 20 peak and appears to have
found support at its 10-week moving average. It's advanced 28%
this year, in line with the broader market as tracked by the