Tobacco makers have been forced to adjust over the years as the cigarette industry has come under fire.
But one thing hasn't changed -- stable cash flows allow them to keep paying hefty dividends to shareholders. Even if fewer people light up in the U.S., many do overseas.
Among the big tobacco companies,Vector Group ( VGR ) on March 10 lifted its quarterly payout by two cents to 40 cents a share for a 7.5% annualized yield. The Miami-based company, whose brands include Grand Prix, Liggett Select and Pyramid, also invests in real estate. Last year it paid $60 million to boost its stake in Douglas Elliman Realty to 71% from 50%. Vector owns Elliman through its New Valley unit, which also holds interests in apartments, condos, hotels and office buildings.
The stock is testing its 10-week moving average for the first time since a January breakout past a 16.83 flat-base buy point.
On Feb. 7,Reynolds American ( RAI ) raised its quarterly dividend to 67 cents a share, a four-cent increase. It works out to $2.68 on an annual basis for a 4.8% yield. Rumors that the Camel and Pall Mall maker is interested in buyingLorillard ( LO ) have returned.
Like its rivals, Reynolds has entered the electronic cigarette market, with its VUSE Digital Vapor Cigarette. The company says the product is performing well in Colorado and Utah. Shares are just shy of a 56.87 entry.
Altria Group ( MO ) in December set a quarterly payout of 48 cents a share, or $1.92 annually, also yielding 4.8%. The Marlboro maker was in the news last week after an Illinois appeals court reinstated a $10.1 billion verdict against its Philip Morris USA unit for misleading consumers about "light" cigarette risks.
Last month, Altria acquired Green Smoke's e-vapor business. The stock is within 5% of a 38.68 buy point. Lorillard (4.2% yield), whose blu eCig market share is growing in the U.S., is also within 5% of a 56.95 cup-base buy point.British American Tobacco ( BTI ) (4% dividend yield) is just below a 115.92 entry.