Three tobacco companies top IBD's Dividend Leaders screen.
That's no accident.
The three companies have solid dividend yields of more than 4%
and steady financial performances. Moreover, all three are
trading near new highs.
Altria Group (
), best known for Marlboro cigarettes, pays a quarterly dividend
of 48 cents a share. That translates to an annualized yield of
5.1%. Altria raised its dividend from 44 cents on Aug. 23, making
the 47th increase in the past 44 years.
In Q3, the company beat earnings and sales expectations and
raised its guidance. The stock is testing resistance around
Reynolds American (
), the nation's No. 2 tobacco company, is paying 63 cents per
quarter, for an annualized yield of nearly 5%.
Reynolds raised the dividend in May, lifting it by 4 cents.
Just three years ago, the quarterly dividend was 45 cents a
The company's earnings growth has ranged from 6% to 14% the
past six quarters, making it one of the most steady in IBD's
The stock broke out of a cup with handle last week. It remains
near the 51.35 buy point.
)'s quarterly payout is 55 cents a share, for an annualized yield
over 4%. In February, the dividend went up from 51.7 cents. Four
years earlier, it was 30.7 cents.
Lorillard, which also has one of the steadiest earnings
histories, has shot up more than 12% from an Oct. 10 breakout
Tobacco firms have the advantage of making products that are
habit-forming. That makes the stocks attractive for income
investors. But the industry also faces heavy regulation,
continued litigation over health risks and a publicity campaign
The industry is trying to compensate by offering smokeless
tobacco products such as electronic cigarettes. They look like
regular cigarettes but don't produce smoke, ashes or smell, while
creating a vapor containing nicotine.