Dear Mr. Berko: I have $ 23,000 that I want to invest and grow revenue. I asked my broker about tobacco stocks because they show very good yields. He told me that the tobacco industry is in a ditch in the next five years, and fewer people smoke today, and hundreds of billions of dollars in settlements they did with the state governments will soon hurt them very badly.
I know the tobacco companies have been fined hundreds of billions of dollars, but it does not seem to affect their share price, dividends or profits. How is this possible? Do you think that this is a good action, and if you do that you bought? - H.E., Akron, Ohio
Dear H.E, it would seem a huge tobacco settlements (more than $ 200 billion paid to the state attorneys general) is not worth the big tobacco (Altria, British American Tobacco, Lorillard and Philip Morris) more than a few pence and six pence. Big Tobacco has hired ten years ago, sleek and most intelligent, creative, and “snake” of lawyers to ensure continued profitability and stability in the tobacco industry. Whether we like it or not, cigarettes are essential to the health of the economy, vital to the budgets of public administration and for millions of Americans who depend on tobacco sales and profits, to earn a living.
Therefore, when the jury decided the tobacco industry was guilty of sin, Big Tobacco paid billions of dollars - but only by increasing the price of a pack of cigarettes. And in the agreement paved the tobacco lawyers for more than ten years ago, Big Tobacco got almost everything it wanted. States agreed that they would never sue Big Tobacco and tied their payments to the State tobacco products. Thus, if a reduction in tobacco sales, the states receive less money, in effect putting the state in the tobacco business.
Remember 25 years ago, when a pack of cigarettes costs about 50 cents to 75 cents? Today in many states, the package costs about $ 7 to $ 9, which includes $ 1.01 in tax on the federal government, plus $ 3 to $ 5.35 in tax for the state, as Connecticut, Hawaii, New York, Rhode Island and Washington.
Multibillion-dollar agreement with the states was food for anti-smoking lobby, he received millions of dollars on education programs, cancer research and related support groups. And if big tobacco sales fall, the state will see less revenue from taxes on tobacco products. Our state can not help becoming addicted to tobacco and survival of all those programs, employing more than 110,000 Americans.
Americans do not realize the importance of taxes on tobacco products are for their welfare. The tiny state of Montana raised more than $ 85 million from taxes on cigarettes in 2010. New York has collected more than $ 1.5 billion, while the federal government was richer by more than 18 billion dollars. Yes, a billion! In 2010, states, counties, cities and the federal government collected more than $ 200 billion in cigarette sales taxes. What is it! And smokers are paying 100 percent of the cost of their sins. Anti-smoking lobby was a big failure, but its senior management are paid big money.
Over the past five years, the big tobacco has increased revenues, profits and dividends, very nice, and the share prices of companies also did well. So I think that (MO-$ 30,46), Altria Group in the $ 1.64 dividend brings the 5.7 per cent (LO-$ 130,34) Lorillard in the $ 6.20 dividend brings the 4.9 per cent and Phillip Morris International ( PM-$ 84,62) $ 3,08 brings dividends represent 3.9 per cent above the average level of investment income, earnings and dividend growth. Each of these companies produces strong cash flow, which allows them to maintain significant benefits, despite the challenges. And, despite the negative factors that surround this industry (which I believe are taken into account in their actions), these companies have good cost management and effective pricing.
Go ahead and buy these three. I think they will do, but in the next few years, as it did in the past few years.