I had a limit order filled this morning for LO. I purchased 26 shares @ $115.00 / share giving me a YOC of 5.4%. At a quarterly dividend of 1.55, this will be a nice boost to my dividend stream paying me $161.20 annually.
LO is projected to earn 7.88, 8.56, 9.41, 10.05 for 2012-2015 respectively. LO has a payout ratio of 70%, TTM P/E of 14.13, and P/S of 2.31. This is the 5th year of dividend increases and I believe they will be able to continue this for the foreseeable future. The company approved in August a share repurchase program up to 50 M worth of shares.
I also noticed a lot of smokers when I was just in Europe these last two weeks. Much more so than where I'm from. Unfortunately, LO doesn't have a big international presence. It's big seller is its Newport brand which accounted for 88.4% of its sales revenue in 2011. They also own Kent, True, Maverick and Old Gold brand names and recently purchased Blu Cigs for 135 Million. There are 43 differenct product offerings within these 5 names.
I hadn't really looked into LO mainly due to their lack of international exposure. Although after finding out about the e-cig company they bought, I feel that could be a big driver of growth. Good buy, especially with a 5.4% YOC that could potentially grow at a high single to low double digit rate for the next few years.
ReplyDeleteAfter my last two purchases had yields sub 3% , I wanted to add a higher dividend payer to help increase my average. I now have a sizable portfolio weight in tobacco stocks, I would eventually like to get more international exposure though. LO would have to drop significantly for me to add more at this time.
DeleteNice purchase! It seems like LO is on the radar of several dividend growth investors. I've done a bit of research on it myself and will continue to watch the stock. One thing to note is that they are unlikely to break into the international market -- the company sold its trademarks outside the U.S. in 1977, which is why all of its sales are domestic. That said, they seem to be gaining market share in the U.S., and they could see additional gains from the e-cig market.
ReplyDeleteI hope you had a great time in Europe -- welcome back!
Thanks DGM. It is good to be back. You're correct about them selling their major trademarks in 1977 per their 10-k. I read their 10-k from my cell phone and somehow missed that part. Either way, I still like the company but would like some international tobacco exposure eventually. If the e-cigs take off maybe that could be their ticket.
DeleteYeah a lot of us think highly of LO. It's hard to resist the yield and forecasted growth. Without even meaning to, I've read quite a bit on Lorillard through articles on the other tobacco stock I own.
ReplyDeleteAs a side note. We can buy 'Ports here on base in S. Korea. The label says it's manufactured by R.J. Reynolds since it's for sale outside the U.S. It's weird because I'm pretty sure the Marlboros are Altria, I'll have to double check on that. The base sells American products but Philip Morris Marlboros can be found outside the wire.