Dividend Comparison – Tobacco

Tobacco companies manufacture, market and sell cigarettes and other tobacco products. The tobacco giants have been cash cows for many investors as they pay hefty dividends and raise the dividends year after year. The tobacco customers, once hooked, are customers for life except for a small percentage of quitters.
tobacco
The major players in the tobacco industry are listed below.

Company Name Ticker Quote Mkt Cap P/E Yield 5-yr DGR
Altria MO $35.55 $71B 16.23 5.40% 14.30%
British American
Tobacco
BTI $107.57 $102B 16.48 3.95% 10.01%
Lorillard LO $45.11 $16B 14.03 4.88% N/A
Philip Morris PM $90.47 $146B 17.55 4.16% N/A
Reynolds American Inc RAI $49.96 $27B 18.15 5.04% 7.80%
Some tobacco companies listed above have massive amounts of debt. The debt/equity ratio for Altria (MO) is 4.17. Lorillard (LO) and Philip Morris (PM) have negative equity and as a result the debt/equity number remains meaningless. The book value/share for LO is -4.95 and PM is -3.37. The amount of debt and negative equity of these companies keeps me away, even though the the stockholders have been rewarded with a YTD performance of 17.56% (MO), 19.12% (LO), 10.25% (PM).
The other two listed tobacco giants have better and manageable debt – BTI with a debt/equity of 1.79 and RAI with a debt/equity of 1.10.

My Thoughts

The tobacco industry faces more challenges around the world – facing an increased resistance in marketing and sales of the product, litigation and acknowledgement from the public about the health risks associated. The western world taxes cigarettes highly (with the exception of US – although some states in the US tax cigarettes more than others) in order to get people to quit as it puts immense load on the public health system.
Some companies have had decent success by getting into the e-cigarette business and others such as Altira have diversified by producing and selling alcohol products. All things considered, I have decided to stay away from the tobacco companies for now and look for a better valuation in the future to invest in them.
Disclosure: None
Disclaimer: The information provided here is for educational purposes only. All opinions here are my personal opinions and should not be taken as financial advice. I am not qualified to be a financial advisor. Always consult with your financial advisor before investing in any of the companies mentioned on this blog.

Chatter Around the World – 12

Chatter Around the World is a weekly link update of economics, investing, dividends and personal finance articles that have caught my eye. In these weekly updates, I also capture my blog updates and news related to my holdings.

New blog posts

Let dive into the links that caught my attention this week.

Updates from My Portfolio Holdings

Married & Back from Vacation

I finally tied the knot! I got married earlier this month and took some time off after the wedding. I finally got the downtime which I haven’t had all summer and managed to relax on the beach a couple of days and a mini-honeymoon to Chicago. 
I have had a whole list of things to complete after the wedding was over and I am starting to work through them. One of the big ones on that list, that I intend on writing about later on this blog, is re-assessing and balancing my portfolio with my wife’s portfolio. Her portfolio mostly consists of balanced income generating mutual funds and index funds.
I do not intend to update the portfolio on this blog to include hers until the end of the year 2013, as I want to keep things separate in order to track my progress and goals. Once 2014 rolls around, I will update the portfolio and the goals page to include our combined portfolios.

Inter Pipeline – Changes & Dividend Increase

Inter Pipeline Ltd
Inter Pipeline has completed conversion to a corporation earlier this week. The TSE trading symbol has been updated to reflect these changes from IPL.UN to IPL.

Inter Pipeline also announced on Sep 9, 2013 a 13% increase in monthly dividends from $0.095 to $0.1075 per share commencing with its September 2013 dividend payable in October 2013. Annualized dividends will increase from $1.14 to $1.29 per share.

My portfolio consists of 120 shares of Inter Pipeline, which increases my monthly dividends from $11.40 to $12.90 and annual dividends from $136.80 to $154.80, an increase of $18.

Chatter Around the World – 11

Chatter Around the World is a weekly link update of economics, investing, dividends and personal finance articles that have caught my eye. In these weekly updates, I also capture my blog updates and news related to my holdings.

New blog post this week

Let dive into the links that caught my attention this week.

Updates from My Portfolio Holdings