3 High-Yielding Tobacco Stocks To Fire Up Your Returns

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The United States saw a rising number of smokers in 2020 because of COVID-19-pandemic-led stress and depression. In recent years, the number of smokers has declined by 3-4% per year. To mitigate the health implications amid the rising demand, tobacco companies have been researching and launching next-generation, low-risk tobacco products, including moist snuff or e-vapors. As the harmful effects of smoking are reduced in the future by these next-generation products, the number of smokers is expected to rise globally. The global tobacco market size is likely to expand at a CAGR of 1.8% over the next seven years to generate $1.07 trillion in revenue by 2028.

Also, tobacco companies are collaborating with others to secure U.S. Food and Drug Association’s (FDA) approvals for their product pipelines. As a result, next-generation tobacco products are likely to generate significant revenues for these companies. Furthermore, to attract investors, many tobacco companies are increasing their dividend yields.

Thus, we think high-yield tobacco companies Altria Group, Inc. (MO), Imperial Brands PLC (IMBBY), and Schweitzer-Mauduit International, Inc. (SWM) are ideal investments bets now.

Altria Group, Inc. (MO)

MO manufactures and sells smokable products, oral tobacco products, and wine in the United States. The company’s popular brands are Marlboro cigarettes, Black & Mild cigars, and moist smokeless tobacco products under the Copenhagen, Skoal, Red Seal, and Husky brands. Also, MO provides finance leasing services, primarily in transportation, power generation, real estate, and manufacturing equipment industries. The company sells its tobacco products primarily to wholesalers, including distributors; and large retail organizations, such as chain stores.

In February, MO declared a quarterly dividend of $0.86, payable on April 30, 2021. Philip Morris USA, an MO subsidiary, developed  IQOS 3, a tobacco heating system device, with three HeatStick variants, under an exclusive agreement with Philip Morris International, Inc. (PM). The U.S. Food and Drug Administration (FDA) has authorized its sale in December.

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