And this breakthrough has already set off a frenzy among hedge funds and Wall Street’s top investors. Domestic cigarette volumes declined 10.2%, but the smokeable products segment delivered solid adjusted operating companies income growth behind Marlboro’s strength. In response, Altria has invested heavily in new products that appeal to changing consumer preferences, as the smoke-free category continues to grow.
- However, it still owns Philip Morris USA, the subsidiary that oversees Altria Group’s cigarette brands.
- I started my career in the industry at one of Canada’s largest REITs, where I honed my skills analyzing and facilitating over a billion dollars in commercial real estate deals.
- According to the Centers for Disease Control and Prevention, the number of tobacco farms in the United States decreased from 93,530 in 1997 to roughly 3,000 in 2022.
- Universal’s adjusted earnings-per-share totaled $0.38 during the quarter, which was way weaker than the results seen in the previous quarter, when Universal generated a substantially larger profit.
- The key behind an investment in tobacco stocks is the inelastic demand for cigarettes relative to their price due to the addictive nature of these products.
It’s a leap so massive, it could reshape how businesses, governments, and consumers operate worldwide. RLX Technology Inc is engaged in the manufacturing of e-vapor products for adult smokers. It has an integrated offline distribution and “Branded store plus” retail model tailored to China’s e-vapor market. Due to strong cash generation, low capex requirements and the stability of Philip Morris’ business model during recessions the dividend remains relatively well-covered. Philip Morris International was spun off from Altria in 2008, and is charged with the production and distribution of Altria’s products outside of the United States. Revenue came in at $6.1 billion, above the consensus estimate of $5.2 billion but down 1.7% compared to the same period last year.
The tobacco industry is evolving
It’s raised its dividend 60 times in the past 56 years, effectively making it a Dividend King, an unofficial status due to its spin-off history. Unsurprisingly, Altria’s cigarette shipment volumes have slipped, too. Cigarette shipment volumes fell 10.2% in 2024 to 68.6 billion, and revenue declined 1.9% to $24 billion.
Trends and News in the Tobacco Stock Market
And here’s the wild part — this $250 trillion wave isn’t tied to one company, but to an entire ecosystem of AI innovators set to reshape the global economy. Companies now looking to phase out traditional products and replace them with healthier, lower-risk alternatives opens the tobacco industry to new players. We see PM, UVV, and MO currently offering the highest expected total returns. But valuations are relatively low, dividend yields are high, and most companies are diversifying away from tobacco. Tobacco stocks as a group have had a difficult time in the past couple of years.
Demand will almost certainly continue to decline as taxes and prices rise. The percent of the U.S. smoking adult population has steadily declined from 42% in 1965, to just 11.6% as of 2021. Rankings are in order of projected total returns from lowest to highest.
Market Newsletter
Despite predictions of the industry’s decline, tobacco stocks still appeal to investors. Historically reliable dividends and profits combined with next-generation products may result in stronger growth. Investors may want to consider investing in a basket of tobacco stocks to gain exposure to different growth strategies and reduce risk. While income investors can still count on tobacco companies to deliver dividends, the path to growth in the industry is uncertain. Overall, tobacco stocks offer reliable and growing dividends, the ability to perform even in a down economy, and exposure to growth markets in smoke-free products like vapes and nicotine pouches. In the world of investing, tobacco stocks often spark a heated debate.
Online brokers provide the platforms, powerful tools and comprehensive resources to learn, track and trade the top tobacco stocks on major stock exchanges. Take a look at Benzinga’s list of some of the best tobacco stocks before you invest. Universal Corporation reported its first quarter earnings results in August. The company generated revenues of $594 million during the quarter, which was considerably less than the revenues that Universal Corporation generated during the previous period.
British American Tobacco
Top stocks have consistently paid attractive dividends while offering share-price appreciation. Knowledge of the adverse effects of smoking, changing consumer tastes and increased regulations all contribute. Organic growth due to rising cigarette prices and the rise of vaping products should be positive for revenues, and declining interest expenses due to debt paydown could impact profitability as well.
This isn’t just about making money – it’s about being part of the future. The future is powered by artificial intelligence, and the time to invest is NOW. This stock is so off-the-radar, so absurdly undervalued, that some of the most secretive hedge fund managers in the world have begun pitching it at closed-door investment summits. It also owns a huge equity stake in another red-hot AI play, giving investors indirect exposure to multiple AI growth engines without paying a premium.
What most investors don’t realize is that one under-owned company holds the key to this $250 trillion revolution. British American Tobacco reported its half-year earnings results in August. The company saw its revenues expand by 1.8% in constant currencies, but due to currency rate headwinds, reported revenues were down by 2.2% for the period.
Top stories, top movers, and trade ideas delivered to your inbox every weekday before and after the market closes. Price increases, especially in combustibles, also played a key role in driving revenue. In all of fiscal 2025, Universal Corporation saw its earnings-per-share pull back by close to 10%. In addition, pricing increases have the impact of reducing usage further.
It seamlessly integrates with Excel and Google Sheets, making financial analysis a breeze. Imagine having all the data you need, without the hassle of manual entry. It’s delivering real cash flows, owns critical infrastructure, and holds stakes in other major growth stories. Each data center powering large language models like ChatGPT consumes as much energy as a small city. But the real story isn’t Nvidia — it’s a much smaller company quietly improving the critical technology that makes this entire revolution possible.
The company claims that HNB devices are safer than regular cigarettes because they don’t burn tobacco. However, the science is still being debated, and the Food and Drug Administration (FDA) has not concluded that HNB devices are safer than cigarettes. Despite the difficulties it’s faced in diversifying away from cigarettes, Altria Group remains a dividend powerhouse.
- Also, the acquisition of Swedish Match in 2022 has been accretive to EPS, with Zyn nicotine pouches driving exceptional revenue growth and accelerating PMI’s transition to smoke-free products.
- As the world chases faster, smarter machines, a hidden crisis is emerging behind the scenes.
- In the world of investing, tobacco stocks often spark a heated debate.
- The company saw its revenues expand by 1.8% in constant currencies, but due to currency rate headwinds, reported revenues were down by 2.2% for the period.
- This allows for predictable revenue and high levels of profits over time.
The company is organized into two operating segments, tobacco and logistics. The tobacco segment includes the manufacture and sale of its various tobacco products, while the logistics segment distributes tobacco to product manufacturers. An increasing number of U.S. states have significantly raised the tax on cigarettes to reduce their budget deficits, and to reduce the potential appeal of smoking for consumers. This has led to much lower volumes of total cigarettes sold, producing a declining total to be split up among the various companies selling cigarettes. As a business owner, selling products that have high profit margins best tobacco stocks along with strong brand awareness and an exceptionally loyal customer base is strongly desirable. Since its split from Altria in 2008, the company has raised its dividend every year, and its dividend has increased by 194% as of June 2025.
