Dividend stocks should be a part of everybody’s long-term stock portfolio. Let’s take a look into the tobacco industry, an industry that I have analyzed by the best yielding dividend stocks a few months ago. The industry is shadowed by negative volume growth and law suits. A positive is the strong cash flow which tobacco stocks generate. In addition, they pay huge dividends and have a very stable business. The industry has a total market capitalization of $235 billion, the average P/E ratio is 14.3, P/B ratio 4.1 and the average dividend yield amounts to 4.4 percent.
I screened stocks from the industry with a dividend yield more than 3.5 percent and a 3-Year Dividend Growth of more than five percent. Below are four major dividend paying players from the tobacco industry that met these criteria:
Here are my four most promising results:
1. Philip Morris (PM) has a market capitalization of $121.1 billion, generates revenues in an amount of $71.5 billion and a net income of $7.9 billion. It follows P/E ratio is 15.8 and forward price to earnings ratio 13.2, Price/Sales 1.7 and Price/Book ratio 33.2. Dividend Yield: 3.7 percent. Years of Consecutive Dividend Increasing: 2 Years. 3-Year Dividend Growth: 11.6 percent. The company paid dividends since 2008. The expected EPS growth for next year amounts to 9.2 and 11.6 percent for the upcoming 5 years. The beta ratio is 0.83.
2. Lorillard (LO) has a market capitalization of $15.3 billion, generates revenues in an amount of $6.3 billion and a net income of $1.1 billion. It follows P/E ratio is 15.1 and forward price to earnings ratio 12.9, Price/Sales 2.4 and Price/Book ratio is not calculable due to a negative book value per share of 5.97. Dividend Yield: 4.7 percent. Years of Consecutive Dividend Increasing: 6 Years. 3-Year Dividend Growth: 12.1 percent. The company paid dividends since 2008. The expected EPS growth for next year amounts to 10.3 and 9.5 percent for the upcoming 5 years. The beta ratio is 0.43.
3. Reynolds American (RAI) has a market capitalization of $22.1 billion, generates revenues in an amount of $8.6 billion and a net income of $1.4 billion. It follows P/E ratio is 16.5 and forward price to earnings ratio 13.4, Price/Sales 2.6 and Price/Book ratio 3.3. Dividend Yield: 5.6 percent. Years of Consecutive Dividend Increasing: 6 Years. 3-Year Dividend Growth: 5.7 percent. The company paid dividends since 2004. The expected EPS growth for next year amounts to 6.8 and 8.0 percent for the upcoming 5 years. The beta ratio is 0.63.
3. Altria (MO) has a market capitalization of $55.9 billion, generates revenues in an amount of $23.9 billion and a net income of $3.4 billion. It follows P/E ratio is 16.4 and forward price to earnings ratio 12.4, Price/Sales 2.3 and Price/Book ratio 12.1. Dividend Yield: 6.1 percent. Years of Consecutive Dividend Increasing: 45 Years. 3-Year Dividend Growth: 9.4 percent. The company paid dividends since 1928. The expected EPS growth for next year amounts to 6.9 and 6.4 percent for the upcoming 5 years. The beta ratio is 0.46.
Also take a look at my screening results of the eight best yielding tobacco stocks. The average price to earnings ratio amounts to 16.0 while the average dividend yield amounts to 5.6 percent. Price to book ratio is 9.6 and price to sales ratio 1.8.
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