Dividend Stock #6 Reynolds American (RAI)
Reynolds American (NYSE: RAI) is the tobacco giant behind such iconic brands as Winston, Camel and Kool cigarettes.
- Current Yield: 5.5% ($2.12 a share annually)
- Dividend History: In June 2010, the company paid 45 cents a share for its quarterly dividend (adjusted for a 2-for-1 split). This year, it will pay out 53 cents a share in June. That’s a nearly 16% increase.
- Dividend Outlook: According to Bloomberg, Reynolds American has a three-year expected dividend growth rate of 8.2%.
- Recent Performance: Reynolds American stock is up about 27% in the past year, compared with about 17% gains for the Dow Jones Industrial Average.
- Strong Outlook for Shares: Amid economic uncertainty and a lack of other income investments, the reliability of Big Tobacco is popular with many investors. That buying pressure is good for shares, and coupled with the fact that “sin stocks” selling guilty pleasures tend to do well in tough times, RAI has a strong sales outlook.