by: Ned Piplovic
Two tobacco companies with ex-dividend dates on March 20 and March 21, 2017, are on track to extend their respective dividend boosting records to nine and 19 consecutive years.
These two companies have been hiking their annual dividend payouts each of those years at double-digit rates. In addition, two other tobacco companies that have increased their share prices 15%-plus since March 2016 and have long records of boosting dividends as well.
The ex-dividend dates for these two companies were last week. However, with their strong stock performance, it might not be a bad idea to consider taking a position now in anticipation of next quarter’s dividend distribution.
Vector Group Ltd. (NYSE:VGR)
Vector Group Ltd. manufactures and sells cigarettes in the United States. The company produces cigarettes in 117 combinations under various brand names and e-cigarettes products. In addition to its tobacco and e-cigarettes business, the company provides residential brokerage and real estate sales marketing services, owns and manages its own real estate properties and engages in land development activities. Vector group also operates elliman.com and AskElliman.com websites.
The share price endured some volatility during the past year but managed to rise 6% between March 2016 and the end of February 2017. However, the stock dropped 9% between March 1 and March 7, 2017. The current price is 5% below the March 2016 price.
Vector Group’s quarterly dividend of $0.40 is equivalent to a $1.60 annualized payout and a 7.5% yield. Since 1997, when the current streak of consecutive annual dividend hikes began, the company has been growing its annual payout at an average annual rate of 14.4%. The current annual payout is 13 times higher than the annual distribution 19 years ago.
Philip Morris International Inc. (NYSE:PM)
Philip Morris International Inc. manufactures and sells cigarettes, other tobacco products and other nicotine-containing products under some of the most well-known brands internationally. The company also owns various local cigarette brands across the globe. Philip Morris International Inc. was incorporated in 1987 and is based in New York, New York.
The current annual dividend payout of $4.16 is paid quarterly and yields 3.8%. Since 2008 the company has been growing its annual distribution at an average rate of 17.2% every year. Consequently, the current payout has quadrupled over the past nine years.
For most of 2016, the share price traded relatively flat between $95 and $103 but dropped below $87 by the end of November. However, the share price gained 18% between Jan. 12 and early March 2017. The price is currently trading at its all-time high above $110.
While dividend yields for the two equities below are slightly lower than the first two examples, their share prices have increased 16.4% and 20.6% in the last year and have attained triple-digit price percentage gains during the last five years. Also, ex-dividends for these companies were last week and it will be another three months until the next quarterly distribution.
Reynolds American, Inc. (NYSE:RAI)
Reynolds American, Inc. sells cigarettes and other tobacco products in the United States. It operates through RJR Tobacco, Santa Fe and American Snuff segments. The company also manufactures and markets digital vapor cigarettes and markets nicotine replacement therapy products. Reynolds American Inc. was founded in 2004 and is headquartered in Winston-Salem, North Carolina.
The company just bumped its quarterly dividend more than 10% versus the previous period. Reynolds American’s annual dividend of $2.04 is equivalent to a 3.4% yield. Since 2004, the company failed to raise its annual payout only once and has averaged an 11.6% annual growth rate.
The share price lost 16% between March and mid-October 2016, when it reached its 52-week low. Since then, the share price rose 39% and closed on March 9, 2017 at 66.45. During the last five years, Reynolds American’s share price increased 195%.
Altria Group, Inc. (NYSE:MO)
Altria Group, Inc. is primarily known as a manufacturer and seller of cigarettes and smokeless tobacco products. However, the company also produces and sells varietal and blended table wines, and sparkling wines under several labels and the company imports and markets several international labels in the United States. Additionally, Altria Group provides finance leasing services primarily in aircraft, electric power, railcar, real estate and manufacturing industries. Altria Group, Inc., founded in 1919, is headquartered in Richmond, Virginia.
The company’s current annualized payout of $2.44 is equivalent to a 3.2% yield. Since its last dividend cut in 2009, Altria Group boosted its annual distribution at an average rate of 4.6% for eight consecutive years. The company started paying a dividend in 1928.
The share price gained 11% between March and July 2016 but then lost 15% by mid-November. Since then, the price rose 36%, reached its 52-week high during trading on March 9, 2017, but closed slightly lower at the end of trading.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.