Despite the unabated battle against smoking across the globe, the cigarette and tobacco products manufacturing companies have time and time again proven not only their resilience and adaptability to new market and regulatory conditions, but also their value as solid companies with good management possessing significant long-term growth potential and constituting significantly lucrative investment choices.
This was confirmed once again when the Austin, Texas-based Yacktman Asset Management Fund, a fund that has consistently recorded massive growth rates and huge volumes of inflows, revealed its list of higher-yielding investments in its portfolio for the first quarter of 2014.
Ranking at the top of this list as being two of the best income producers for the fund are two of the major players in the international tobacco industry. In fact, they even both originated from the same company. They are namely the Altria Group and Philip Morris International, both of whichhave long been in the Yacktman fund’s selected investments and which are currently recorded to be offering dividend yields of 4.7%, and 4.3%, respectively.
The original company was Philip Morris but it had its named changed into the Altria Group in 2003 for its US based tobacco related operations, while in 2008 Philip Morris International was created for the non-US activities of the group and its brands, in an attempt to increase flexibility and freedom when trading on non-American soil.
Market analysts propose that the high yields of these tobacco companies is owed to their existing resources and well established distribution channels and networks, which enable them to quickly thwart any potential outside competition. Moreover, the two companies are well positioned in the ever-growing e-cigarette market, a fact that is bound to steam their growth and prospects even further, especially in view of looming regulation of the e–cig industry by the FDA. However, they are to face strong competition by their rival company Lorillard, which is also successful as it offer a 4% dividend, but holds the greatest market share in the $2 billion worth e-cig industry, since it accounts for nearly 50% of its total sales.