NEW YORK, NY -- (Marketwire) -- 06/06/12 -- In times of economic uncertainty investors look to companies with strong earnings and high dividends. The Cigarette Industry has been known to have some of the safest dividends in the market. During the last recession, which saw many companies slash dividends, cigarette companies dividends held strong. The Paragon Report examines investing opportunities in the Cigarettes Industry and provides equity research on Altria Group, Inc. (NYSE: MO) and Philip Morris International Inc. (NYSE: PM).
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In the S&P 500 there are currently four cigarette companies (Altria Group, Reynolds American, Lorillard, and Phillip Morris International). The average dividend yield of these companies is nearly 5 percent, easily beating the S&P average dividend yield of 2.61 percent.
Tobacco companies continue to face taxation hikes across the U.S. as they are increasingly blamed for soaring healthcare costs. A recent proposed tax hike in California would see the excise tax jump to $1.87 per pack. Tobacco companies, such as Altria Group and Reynolds American, have spent in excess of $40 million on lobbying against the tax.
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Altria Group currently offers investors a dividend yield of around 5.08 percent. Nu Mark, an Altria company, announced its plans to introduce a new type of tobacco product in select stores in Virginia. VERVE discs are a tobacco-derived nicotine product designed to appeal to adult smokers interested in tobacco product alternatives to cigarettes. The product will be available at stores in June.
Philip Morris International currently offers investors a dividend yield of around 3.64 percent. The Minnesota Supreme Court recently ended a class action suit against Philip Morris USA in which smokers sought refunds for "lights" cigarettes they purchased. "The Minnesota Supreme Court properly dismissed this case as barred by the Tobacco Settlement Agreement," said Murray Garnick, Altria Client Services senior vice president and associate general counsel, speaking on behalf of Philip Morris USA.
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