No smoking? No problem.
Tobacco giantReynolds American (
) has paid a dividend for 36 straight quarters since going public
in 2004, and its stock has been a steady performer.
The latest dividend hike was declared in May when the company
boosted the quarterly payout by 4 cents a share, or 6.8%, to 63
cents. The annual dividend is $2.52, good for a yield of 5.1% at
the current share price and double the S&P 500 average of
Reynolds American is up 19% year-to-date, outperforming the
S&P's 16% gain. The stock is getting support at the 10-week
line while it works on a flat base with a possible 53.03 buy
Reynolds, the maker of Camel, Pall Mall and other cigarettes,
is grappling with declining sales of traditional tobacco, and it
faces legal battles over smoking-related illnesses. Last month,
an arbitration panel ruled against reducing payments to nine
states that were part of a landmark settlement in 1998. The
settlement requires companies to make annual payments based on
their annual cigarette sales.
Reynolds and other tobacco makers are trying to compensate by
boosting sales of smokeless tobacco products such as electronic
cigarettes, which look like regular cigarettes but don't produce
smoke, ashes or smell.
Despite the head winds, the big-cap stock boasts stable, if
lackluster, profit growth. The three-year earnings stability
ratio is an impressive 1 on a scale of 0 (most stable) to 99
Reynolds recently announced it will report Q3 earnings on Oct.
22 before the market opens. Profit for the period is seen rising
9% from a year ago, up from the previous quarter's 6% gain.
Revenue is expected to edge up 1% to $2.14 billion.
Meanwhile, annual pretax margin has risen for at least eight
straight years, to a robust 31.5% in 2012. Annual return on
equity, a gauge of how well a company is managing its finances,
is also strong and rising.