[quote=patientrenter]flu, how does that 5% compare to bonds? My question is, where is future growth in tobacco earnings and dividends? Sure, unit prices may go up, but the number of smokers is declining. CA bonds are offering 6% tax free if you accept no growth.[/quote]
I’m speculating here (actually, I was speculating since Altria got trashed with all the smokers’ lawsuit)…But, specifically, PM derives most of it’s business from tobacco products overseas…I doubt smokers aren’t going away anytime soon overseas, especially asia. Altria, on the other hand, still holds on to tobacco products in NA, which is probably the problem, with all the anti-smoking thing here. Hence, I don’t own Altria shares, though they seem to be paying a 7% dividend.
Recall: Altria (during the tobacco litigations) eventually split into 3 companies. Kraft(KFT), followed by Altria (MO) and Philip Morris International (PM)
As far as CA bonds…Well, personally, given the bankrupt state of CA we are in, I’d say 6% is kinda low 🙂
I guess I’m sort of naive, in that I try to look at relatively stable companies with a decent dividend and where I think there could be some potential equity upside. Chevron is another (3.9%) though it’s much more volatile these days….In more recent times, I’ve been buying selling buying selling CVX more frequently just because it’s so volatile. I try to get in the mid sixties and exit at the low seventies these days, roughly.
