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Could the Hefty Cigarette Dividends Burn Out?

^{Published on 2011-02-01 08:30:23 - Market Wire}
 

NEW YORK, NY--(Marketwire - February 1, 2011) - Tobacco companies are experts at weathering adverse conditions. Negative publicity has sent North American tobacco demand down in recent years, however cigarette companies have maintained stable revenues by merely upping the price of cigarettes. Stable revenues have kept profits stable, which has kept the sector's high yielding dividends intact. Even during the recession, while companies from most sectors cut their dividend payments, cigarette manufacturers did not. The Bedford Report examines the outlook for companies in the Cigarette Industry and provides research reports on Altria Group, Inc. (NYSE: [ MO ]) & Lorillard, Inc. (NYSE: [ LO ]). Access to the full company reports can be found at:

[ www.bedfordreport.com/2011-01-MO ]

[ www.bedfordreport.com/2011-01-LO ]

Last week Altria posted net earnings of $919 million, or 44 cents a share, compared with $725 million, or 35 cents a share, in the same quarter last year, matching average analyst estimates polled by Thomson Reuters. Cigarette revenue excluding taxes fell 1.5 percent to $3.48 billion during the fourth quarter. However operating income in its cigarette business grew more than 7 percent. Altria has increased its profit per pack for close to three years through price increases and cost cutting. Altria said it cut costs about $65 million in the fourth quarter and expects to save about $145 million more by the end of 2011.

The Bedford Report releases regular market updates on the Cigarette Industry so investors can stay ahead of the crowd and make the best investment decisions to maximize their returns. Take a few minutes to register with us free at [ www.bedfordreport.com ] and get exclusive access to our numerous analyst reports and industry newsletters.

Altria pays an annual dividend of 1.52 for a yield of around 6.40 percent. Michael E. Szymanczyk, Chairman and Chief Executive Officer of Altria, said that the company's "total shareholder's return in 2010 was 32.9 percent, outpacing the S&P 500's total return of 14.8 percent for the eleventh straight year."

Altria competitor Lorillard currently pays a hefty annual dividend of 4.50 for a yield of around 6 percent. The company is scheduled to report earnings next Monday.

The Bedford Report provides Analyst Research focused on equities that offer growth opportunities, value, and strong potential return. We strive to provide the most up-to-date market activities. We constantly create research reports and newsletters for our members. The Bedford Report has not been compensated by any of the above-mentioned publicly traded companies. The Bedford Report is compensated by other third party organizations for advertising services. We act as an independent research portal and are aware that all investment entails inherent risks. Please view the full disclaimer at [ http://www.bedfordreport.com/disclaimer ]