One category of investments that are popular with investors and have done well over the years are the Sin Stocks. These are investments in industries and sectors that are considered unethical or immoral, which include companies in alcohol, tobacco, sex-related, weapons manufacturing and military industries. This post will take a close look at the tobacco industry and presents some of the risk/reward considerations to keep in mind and evaluate: are tobacco stocks still a good investment?
I personally have no qualms about investing in the sin stocks for the sake of ethics, as any company that is worth its salt is probably stepping on other’s toes. The business world is brutal – and needs to be, in order to survive and be successful. Jason at Dividend Mantra had a post touching on this subject recently – entitled How Ethical Can an Investor Be? I agree with his points where he points to the questionable behavior of smartphone sweatshops and other industries. Same goes for the industries that most people consider benign, such as say, the food industry – if anyone takes the time to look into how animals are raised in our current conventional animal farming, it is truly horrifying. But that is a story for another post. Let’s jump into the subject of tobacco stocks.