Why Are Tobacco Stocks Popular?

American cigarette-maker Altria Group ($MO) has delivered a total stock market return of more than 2,540,000%. Every $1 invested in 1975 is now worth over $25,400.

Post-smoking ban, this company has still preformed surprisingly well.

Between July, 2012 and July, 2022, Altria Group provided an average annual return of 7.54%, growing a $10,000 investment into $20,679.

I bring this up, because tobacco stocks (like Altria Group) are incredibly popular with dividend inventors. They generally trade at low valuations, due to the stigma around smoking, while delivering higher-than-average starting yields.

Today’s article examines the tobacco industry as a long-term investment.

Cigarettes Were The Coffee Of Their Day

Tobacco is a plant. On it’s own, it’s nothing special. A commodity, like corn or soybeans. However, tobacco can be processed in a variety of ways. How you dry or blend it has a huge impact on the flavor.

This is similar to coffee, where different roasting methods can create unique end-products.