City Council Speaker Christine Quinn Archives

On March 18, New York Mayor Michael Bloomberg asked his city council to outlaw the public display of cigarettes for sale. If the Democrat-dominated council complies, it will soon become illegal in New York City for vendors of smokes to show customers their wares. They’ll have to be hidden from plain view — stored in cabinets or under counters, for example. Yet it appears that dividend investors invested in smoking stocks don’t see a problem with that.

Already, Bloomberg has pushed through laws raising taxes on tobacco and banning smoking in restaurants and bars, and even in outdoor parks. As for this latest initiative, when asked about Bloomberg’s move last month, City Council Speaker Christine Quinn pronounced herself “very, very open” to the idea.

So why aren’t tobacco stocks suffering?

Dividend investors still hot on smokes
Since news of Mayor Bloomberg‘s proposal broke, shares of tobacco industry bellwether Altria Group are up nearly 5% in value. Lorillard and Reynolds American are up 4.2% each, and even British American Tobacco has notched a respectable 3.4% gain.

There are probably two reasons for this — maybe two and a half.

Hey, New York: Get over yourself
First and foremost, it’s not as if the New York market is the be-all and end-all for these companies. “Gotham” it might be, but America’s most populous city is still just one city, and most of these companies sell across the country and around the globe. So any decrease in tobacco sales caused by a new point-of-sale display ban will only dent the companies’ revenue streams — not dry them up entirely. What’s more, even in NYC, cigarettes will still be available for sale. They just won’t be visible.

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

Buy discount cigarettes here
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, Reynolds, and BAT all sell for about 13 times earnings and change. Lorillard 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’s premium 5.1% yield, to 5.3% at Reynolds, and a whopping 5.4% at Lorillard.

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.

Altria has been the best-performing stock of the past 50 years, but as the number of smokers in the U.S. …read more

Source: FULL ARTICLE at DailyFinance

By The Associated Press

Filed under: Retail, Tobacco, Consumer Protection, Products, Stores, Spending

(Mark Lennihan/AP) A new anti-smoking proposal would make New York the first city in the nation to keep tobacco products out of sight in retail stores.

By JENNIFER PELTZ and MEGHAN BARR

NEW YORK — Anti-smoking advocates and health experts hailed proposals from Mayor Michael Bloomberg that would keep cigarettes out of sight in New York City stores, while tobacco companies and smokers called it an overreach.

The ban, which would be the first of its kind in the U.S., is aimed at discouraging young people from smoking.

Keeping cigarettes under wraps could help, anti-smoking advocates say, citing studies that link exposure to smoking with starting it. Shops from corner stores to supermarkets would have to keep tobacco products in cabinets, drawers, under the counter, behind a curtain or in other concealed spots. Officials also want to stop shops from taking cigarette coupons and honoring discounts, and are proposing a minimum price for cigarettes, though it’s below what the going rate is in much of the city now.

While some of the research focuses on cigarette advertising, an English study of 11-to-15-year-olds published last month in the journal Tobacco Control found that simply noticing tobacco products on display every time a youth visited a shop raised the odds he or she would at least try smoking by threefold, compared to peers who never noticed the products.

“What’s exciting about this [New York City proposal] is that this is the most comprehensive set of tobacco-control regulations that affect stores or the retail outlets,” said Kurt Ribisi, a professor of public health and cancer prevention specialist at the University of North Carolina. Moreover, cigarettes’ visibility can trigger impulse buys by smokers who are trying to quit, he and city officials say.

The American Cancer Society Cancer Action Network, the American Lung Association, other anti-smoking groups and several City Council members applauded Bloomberg’s announcement, made at a Queens hospital on Monday. City Council Speaker Christine Quinn, who largely controls what goes to a vote, said through her office that she “supports the goal of these bills” but noted they would get a full review.

The ban on displaying cigarettes follows similar laws in Iceland, Canada, England and Ireland, but it would be the first such measure in the U.S. It’s aimed at discouraging young people from smoking. According to the Rockland County Times, the Village of Haverstraw in Rockland County passed such a ban last April, but rescinded it four months later because it couldn’t afford to fight a lawsuit brought by tobacco companies and convenience stores.

“Such displays suggest that smoking is a normal activity,” Bloomberg said. “And they invite young people to experiment with tobacco.”

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But smokers and cigarette sellers said the measure was overreaching.

“I don’t disagree that smoking itself …read more
Source: FULL ARTICLE at DailyFinance

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