Four tobacco stocks that are thriving despite headwinds

These stocks could generate substantial returns for investors not averse to the sin industry.

Vikram Barhat 2 May, 2018 | 5:00PM

From a health perspective, consumption of tobacco may be frowned upon, but when it comes to investment returns, the allure of tobacco stocks continues to trump social stigma.

Tobacco companies have been thriving despite the headwinds of growing health awareness, regulatory pressure and a shift in lifestyle choices among young people. Abiding loyalty and a consistent demand that springs from human weakness keep consumers coming back for more and provide these companies with a consistent stream of cash flow and high profit margins, which in turn facilitate smoking hot dividend payouts.

Although conventional tobacco is expected to continue to be the main driver of profit, Big Tobacco manufacturers are rapidly diversifying, independently or through acquisitions, as they shift to the next generation of products, such as vaping products, to retain and gain market share. Further, as the growth in emerging markets helps offset declines in the number of smokers in developed countries, leading tobacco stocks could generate substantial returns for investors not averse to putting their money in the so-called "sin industry."

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Altria Group Inc38.87 USD-0.80
British American Tobacco PLC ADR33.98 USD0.88
Imperial Brands PLC ADR16.93 USD1.62
Philip Morris International Inc74.92 USD-3.75

About Author

Vikram Barhat

Vikram Barhat  Vikram Barhat is a Toronto-based financial writer specializing in investing, stock markets, personal finance and other areas of the financial services industry. He also writes for CNBC, BBC, The Globe and Mail, and Toronto Star.

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