Tobacco stocks are at all time lows and are yielding 10% or more in some cases.
Have any of you looked at tobacco stocks lately? They are very low! And, due to legal judgement concerns, many of these stocks have a large dividend policy so that if they are fined, most of the money will have already been transferred to shareholder hands were it is untouchable. So, as a result, many of these stocks have dividend yield that are about 10%! This is very high! So, invest $1000, in a tobacco company and you get back $100, vitually guaranteed! And, most tobacco companies are very profitable. The reason these stocks are so low is because of all of the lawsuits that are occuring. What will these lawsuits mean to tobacco companies: fines most likely which will be funded by smoking addicts which will end up paying higher prices for ciggaretts. Looking at U.S. history, cigarrette tax increases have been very suttle. In many other countries, they are taxed very heavily, but in the U.S. they are not. It seems like if the past is a guide, there will be a small tax increase on ciggarettes. Some of these tobacco companies such as Phillip Morris have shielded themselves from alot of lawsuits by purchasing legitamite companies such as Kraft. Now, I believe they are one of the largest food companies in the U.S. and this area is probably shielded from tobacco lawsuits. So, it may be a time to think about investing in tobacco companies.
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