U.S. tobacco stocks are demonstrating again that a widely despised product isn’t necessarily an obstacle to big profits and a robust share price.The S&P 500 tobacco index of four stocks hit another record high on Monday, bringing its one-year gains to more than 33 per cent after factoring in the stocks’ fat dividends. That’s about double the pace of the benchmark S&P 500.
The most recent uptick follows two recent positive developments for the tobacco industry, even as it faces long-term declining Viceroy smoking rates in North America and tighter marketing conditions. On Monday, a Florida state court ruled in favour of Philip Morris International Inc. (PM-N65.170.050.08%) and R.J. Reynolds in an Engle case – a series of cases allowing individual smokers to sue tobacco companies after the dismissal of a class-action lawsuit years ago.
