There are few sectors that consistently generate high levels of cash flow. Even fewer are reliable about returning that cash to shareholders. #-ad_banner-#Tobacco is one such industry. As much as some investors love to hate the industry, the major tobacco companies are consistent performers regardless of the broader economy. Investors shouldn’t let the broad health concerns around traditional cigarettes deter them from investing in an industry that has substantial barriers to entry and is great at returning cash to shareholders through dividends and buybacks. One of the big three U.S. tobacco companies, Lorillard (NYSE: LO) is giving investors an attractive… Read More
There are few sectors that consistently generate high levels of cash flow. Even fewer are reliable about returning that cash to shareholders. #-ad_banner-#Tobacco is one such industry. As much as some investors love to hate the industry, the major tobacco companies are consistent performers regardless of the broader economy. Investors shouldn’t let the broad health concerns around traditional cigarettes deter them from investing in an industry that has substantial barriers to entry and is great at returning cash to shareholders through dividends and buybacks. One of the big three U.S. tobacco companies, Lorillard (NYSE: LO) is giving investors an attractive entry point after missing fourth-quarter earnings expectations. The stock fell more than 5% posting earnings of $0.82 a share, missing analysts’ expectations by $0.04. However, revenue for the quarter beat consensus estimates, and it looks like the downward move in the stock might be an overreaction. After all, since Lorillard went public in 2008, the company has outperformed the S&P 500 by over 100%. Despite Lorillard’s earnings miss and the fact that wholesale cigarette volume was down 1.6% year over year during the fourth quarter, the company still expanded its U.S. market share for an 11th consecutive year. Read More