Tobacco Under Pressure As Income Stagnates

Traditionally, tobacco companies have offered investors some of the best cash returns on the market. A combination of high dividend yields and huge stock buybacks have led to investors receiving returns that in some cases have amounted to more than 10% per annum, excluding share price appreciation.

Big tobacco under pressure

However, a worrying trend is now developing within the industry. Big tobacco is under pressure to consistently increase dividends and continue buybacks to boost earnings-per-share while income stagnates as tobacco sales fall. With stagnating cash flows, the only way tobacco has been able to...