NEW YORK, NY--(Marketwire - Nov 21, 2012) - The Tobacco Industry has been known to hold some of the strongest dividends in the market. The average dividend yield of Altria Group, Reynolds American, Lorillard, and Phillip Morris International is approximately 5.0 percent, more than double the S&P 500's average dividend yield of 2.2 percent. The Paragon Report examines investing opportunities in the Cigarettes Industry and provides equity research on Lorillard Inc. (NYSE: LO) and Reynolds American, Inc. (NYSE: RAI).
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Tobacco companies received a boost earlier this week after UBS Investment Research Nik Modi upgraded Altria's rating from "neutral" to "buy." Wells Fargo & Co. analyst Bonnie Herzog has recently predicted that the industry would see a second round of prices increases in 2012. In 2011, Altria Group, Reynolds American and Lorillard raised prices in July and December. Price increases are key for tobacco companies as it helps them generate more cash, which they return to investors in the form of dividend payouts and stock repurchase plans.
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Lorillard's Board of Directors has recently approved a 3-for-1 stock split in the form of a 200% stock dividend. Lorillard shareholders of record at the close of business on December 14, 2012, will receive two additional shares of Lorillard stock for each share then owned. The company currently offers investors an annual dividend of $6.20 per share for a yield of roughly 5.2 percent.
Reynolds American's R.J. Reynolds Tobacco Company is the second-largest U.S. tobacco company. The company's brands include many of the best-selling cigarettes in the U.S.: Camel, Pall Mall, Winston, Kool, Doral and Salem. Reynolds American currently offers investors and annual dividend of $2.36 for a yield of roughly 5.6 percent.
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