S The Conservative Pot Stocks Index Continues To Outperform

The "seed-to-sale" (i.e. vertically integrated) category of cannabis stocks is crashing! They are DOWN -17.3% MTD and DOWN -35.0% YTD so it is understandable that you might be reticent about investing directly in cannabis stocks. Why not consider investing in the category of 6 tobacco, beer and liquor companies that have invested heavily in the cannabis industry. They are UP +4.9% MTD and +5.3% YTD, on average, in comparison, and pay dividends to boot.

Our Conservative Pot Stocks Index

The 6 tobacco, beer and liquor companies mentioned above are constituents in the munKNEE Conservative Pot Stocks Index. The performance of its constituents are compared below with their associated cannabis stocks so far in December (i.e. MTD), as follows, in descending order, with their respective performances YTD in brackets:

  1. Altria Group (MO) is UP +10.3% MTD (UP 19.7% YTD) and now has a Dividend Yield of 7.5%.
    • The company has a 45% stake in Cronos Group Inc. (CRON) which is DOWN -37.9% YTD and pays out no dividend.
  2. British American Tobacco (BTI) is UP +9.0% MTD (UP +1.5% YTD) and now has a Dividend Yield of 8.0%. 
    • The company has a C$221M investment and product development partnership with Organigram Holdings Inc. (OGI) which is UP +42.9% YTD but pays out no dividend.
  3. Constellation Brands (STZ) is UP +5.6% MTD (UP 7.8% YTD) and now has a Dividend Yield of 1.26%.
    • The company has a 39% stake in Canopy Growth Corporation (CGC) which is DOWN -61.1% YTD and pays out no dividend.
  4. Anheuser-Busch (BUD) is UP +2.6% MTD (DOWN -14.5% YTD) and now has a Dividend Yield of 1.0%.
    • The company has a $100 million joint venture with Tilray Inc. (TLRY) which is DOWN -3.4% YTD but pays out no dividend.
  5. Imperial Brands (IMBBY) is UP +0.6% MTD (UP +4.0% YTD) and now has a Dividend Yield of 12.1%.
    • The company has a 19.9% stake in Auxly Cannabis Group Inc. (CBWTF) which is DOWN -11.8% MTD (DOWN -25.0% YTD) and pays out no dividend.
  6. Molson Coors Brewing Company (TAP) is DOWN -1.9% MTD (DOWN -1.0% YTD) and now has a Dividend Yield of 3.0%.
    • The company has a 57.5%/42.5% joint venture, called TRUSS, with Hexo Corp. (HEXO) which is DOWN -77.2% YTD and pays out no dividend.

In Summary

  • Stock Performances:
    • the Conservative Pot Stocks Index is UP +4.9% MTD and UP +5.3% YTD while
    • their marijuana partners are DOWN -18.7% MTD and DOWN-45.0% YTD, on average.
  • Dividend Yields:
    • the Conservative Pot Stocks Index constituents have dividends that currently yield 3.5%, on average, while
    • their marijuana partners pay out no dividends.

AdvisorsShares VICE (VICE) ETF

As mentioned in my article of December 12th, another similar way to invest indirectly in cannabis stocks is to invest in the AdvisorsShares VICE (VICE) ETF. It is an actively managed ETF (net expense ratio of 0.99%) that invests in companies that derive at least 50% of their net revenue from:

  1. gambling/casino companies: 36%,
  2. restaurant/hospitality industry: 19%,
  3. alcoholic beverage companies (includes Constellation Brands): 17%,
  4. tobacco companies (includes all the tobacco constituents in the Conservative Pot Stocks Index except Imperial Brands): 10%,
  5. video games and eSports sector: 8%,
  6. psychedelic compound-based clinical-stage drug companies: 1%, and
  7. other sectors: 9%

VICE is UP +0.7% MTD and UP +3.2% YTD compared to +4.9% MTD and +5.3% for the munKNEE Conservative Pot Stocks Index

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