Altria Group Inc (MO), Lorillard Inc. (LO), Reynolds American, Inc. (RAI): Dividend Investors Shrug Off Mayor Bloomberg’s Anti-Smoking Campaign

The other important factor buoying tobacco stocks among dividend investors is the valuations attached to these companies’ shares.

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After all, tobacco stocks weren’t particularly pricey to begin with, giving them some room to run. If your average stock on the S&P 500 today costs a bit more than 14 times forward earnings to purchase, then all four of these stocks charge less than that. Altria Group Inc (NYSE:MO), Reynolds, and BAT all sell for about 13 times earnings and change. Lorillard Inc. (NYSE:LO) is a relative bargain at just 12.1 times forward earnings.

And of course, the real attraction of these stocks is their generous dividend payments. From a very respectable 2.5% dividend yield at BAT — two-tenths of a percent more than the average S&P stock pays — dividend yields among this group of stocks quickly rocket up the scale to Altria Group Inc (NYSE:MO)’s premium 5.1% yield, to 5.3% at Reynolds, and a whopping 5.4% at Lorillard Inc. (NYSE:LO).

Like a nice, long drag on a smoke, there’s nothing quite like a big, fat dividend yield to ease investors’ worries when Big Government tries to stress ’em out.

The article Dividend Investors Shrug Off Mayor Bloomberg’s Anti-Smoking Campaign originally appeared on Fool.com.

Fool contributor Rich Smith and The Motley Fool have no position in any of the stocks mentioned.

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