The market at large isn’t looking too steady these days. The bias in favor of sellers has many investors feeling nervous enough to want to settle things down by any means necessary.
Well, my advice is to just relax and light up a cigarette.
No, I don’t mean this literally — although I find myself sympathetic to smokers given all of the self-ordained behavior police groups running around trying to restrict personal freedoms. What I am referring to here is giving your portfolio a little tobacco-infused yield. You see, it might not be politically correct to use tobacco products — and particularly cigarettes — here in urban America, but that bias isn’t nearly as prevalent in the emerging market nations. In fact, tobacco companies have seen some fantastic profits of late, as millions of people take up the habit around the globe.
Those profits have translated into some big gains in share price, and some very hefty dividends. Here are five smokin’ hot high-yield stocks that could add some fire to your portfolio.
Philip Morris International
- Yield: 3.93%
- Year-to-date gain: 12.32%
Philip Morris International (NYSE:PM) is a name synonymous with tobacco products, and for good reason. The company’s portfolio of international and local brands includes Marlboro, Merit, Parliament and Virginia Slims. Philip Morris’ global reach extends to approximately 180 countries in the European Union, Eastern Europe, the Middle East, Africa, Asia, Latin America and Canada. Based on its share price on Sept. 12, the yield based on the trailing 12 months of dividends is 3.93%.
British American Tobacco
- Yield: 4.58%
- Year-to-date gain: 12.42%
British American Tobacco (AMEX:BTI) is the maker of cigars, cigarettes and smokeless tobacco products under the Dunhill, Kent, Lucky Strike and Pall Mall brands, among many others. The company has operations in the Asia-Pacific region, the Americas, Eastern and Western Europe, Africa and the Middle East. The London-based company has been selling tobacco products since 1902, so it has plenty of experience generating tobacco profits. It also has practice delivering dividends. The shares pay a yield of 4.58%, and the shares have surged 12.42% in 2011. By comparison, the S&P 500 Index is down 9.25% so far this year.
Lorillard
- Yield: 4.66%
- Year-to-date gain: 31.29%
Lorillard (NYSE:LO) is a U.S.-based cigarettes maker offering 43 different products under the Newport, True, Maverick and Old Gold brand names. Lorillard sells its products primarily to wholesale distributors, who then service retail outlets, and chain store organizations. The stock is yielding a hefty 4.66%, but the stunning thing about LO shares is that their yield comes with a 31.29% year-to-date gain. Now that’s what I call smokin’ hot performance.
Reynolds American Inc.
- Yield: 5.71%
- Year-to-date gain: 11.74%
Reynolds American Inc. (NYSE:RAI) sells its cigarettes under the Camel, Pall Mall, Winston and KOOL brands. In rural America, the company also sells a lot of smokeless tobacco products, such as the Grizzly and Kodiak snuff brands. The tobacco giant’s red-hot yield of 5.71% puts it near the top of our tobacco stocks list. And for that yield you also get a year-to-date gain of 11.74%. That combination makes RAI one great stock for capturing both dividends and share price appreciation.
Altria Group
- Yield: 5.78%
- Year-to-date gain: 7.63%
Altria Group (NYSE:MO) tops this list of five high-yield tobacco stocks, as its 5.78% yield was the best of the crop. Yet in terms of share price performance, Altria actually has lagged its competition with a 7.63% year-to-date gain. Still, that lights up the S&P 500’s dogged decline. Altria recently upped its quarterly dividend to shareholders some 8%, making it even more attractive to own shares of the tobacco giant.
As you can see, investors smart enough to light up a cigarette in their portfolios have been the beneficiary of some great returns, as well as some very high yields. So, smoke ’em if you got ’em, and if you don’t, consider one or more of these stocks if you are looking for high yield and big upside performance.
