The continued legalization of marijuana means growth for companies in this sector. Considering what happened with Juul, the IQOS brand runs a que es scalping similar risk of regulatory crackdown internationally and in the U.S., where Philip Morris has partnered with Altria to sell the product line.
- 22nd Century has tried to diversify somewhat, using its biotech expertise to branch into the cannabis oil realm.
- Universal, however, prides itself on not manufacturing any tobacco products for direct consumer use.
- The company has pursued a strategy of emphasizing its Eagle 20’s and Pyramid brands, building up brand loyalty and then making targeted price increases to maximize profit margin.
- Its processing and blending facilities also help improve the quality of the end products it sells to consumer goods companies.
However, the company isn’t blind to the changing dynamics of the tobacco industry. Its Universal Enterprises unit offers products including pure liquid nicotine for vaping and other alternative uses, as well as services related to laboratory testing of vapor and next-generation tobacco products. The Universal Ingredients business even goes beyond tobacco, making fruit and vegetable products that match up well with the consumer trend toward natural ingredients. List of the largest publicly traded tobacco and cigarette companies by revenue. Tobacco stocks as a group have had a difficult time in the past couple of years.
Publicly Traded Tobacco Products Companies – SIC Code 21
Philip Morris International was spun off from Altria in 2008, and is charged with the production and distribution of Altria’s products outside of the United States. But first, we’ll take a look at the tobacco industry’s primary concern, which is declining tobacco usage. In 2008, Altria officially moved its headquarters from New York City to Richmond, Virginia, after Philip Morris sold its downtown offices in New York City a decade earlier.
- However, Australia, Latin America, Canada, the Middle East, Africa, and Eastern Europe are all significant contributors to the tobacco giant’s performance.
- In particular, Standard Diversified owns a 51% stake in Turning Point Brands.
- The tobacco industry may be reviled by some, but it has been a big winner for investors for much of its history.
- Given that BAT is seeing many of the same downward trends in traditional cigarette usage that its peers around the world have suffered, these alternative products will become increasingly important for the company’s continuing success.
- As a result of its legacy with Altria, Philip Morris has rights to the Marlboro brand of cigarettes across the globe, and that’s the most important of six major Philip Morris brands that are among the 15 largest in the world.
Instead, Universal purchases, processes, and sells a wide variety of different types of leaf tobacco, including flue-cured, burley dark air-cured, and oriental tobacco. The company works directly with tobacco cultivators to help provide support in their agricultural pursuits, as well as offering research on best practices along with financing opportunities. The company boasts operations on five continents and expects to facilitate production of more than 5.2 billion kilograms of leaf tobacco of all types during 2019. Given that BAT is seeing many of the same downward trends in traditional cigarette usage that its peers around the world have suffered, these alternative products will become increasingly important for the company’s continuing success. Since its split from Altria in 2008, the company has raised its dividend every year, and its dividend had increased by 172% as of July 2022. If its history as part of Altria were included, it would qualify as another Dividend Aristocrat.
Tobacco Stock #1: Altria Group (MO)
Its high operating profit margin, which topped 40% in 2021, helps to ensure the dependability of the quarterly payout. The same month that Altria took a stake in Juul, it acquired 45% of Cronos Group for $1.8 billion and made the company its exclusive partner for cannabis. In June 2022, the FDA said it would ban Juul in the U.S., although a lawsuit kept the ban from being immediately enforced. Juul has also faced a difficult regulatory environment in international markets and pulled out of five European countries in 2020.
Other forms of tobacco usage have seen similar rates of decline, including smokeless tobacco. This has been the case with every demographic group, so it is widespread among all of the companies’ potential customers. As a business owner, selling products that have high profit margins along with strong brand awareness and an exceptionally loyal customer base is strongly desirable.
Largest tobacco and cigarette companies by market cap
Management has set a target payout ratio of 80% of earnings per share, knowing that its dividend is the main reason that shareholders own the stock. The next stock on our list is Imperial Brands, a filling the gap stocks British tobacco product conglomerate that was founded in 1901. Today, the company is a market leader in a variety of locations around the globe and produces just over $10 billion in annual revenue.
Pyxus is still small, and its revenue from leaf tobacco has been falling over the years. If cannabis and related markets can bring it back from the brink, however, then Pyxus shareholders might end up getting the last laugh. The three tobacco companies discussed above all specialize in marketing consumer tobacco products to their customers. Universal, however, prides itself on not manufacturing any tobacco products for direct consumer use.
Tobacco Stocks List The 6 Best Now, Ranked In Order
Throughout the 20th century, tobacco stocks were among the best performers, benefiting from an addictive, highly profitable, recession-proof product, plus a reputation for offering generous dividend yields to investors. We see Altria, British American Tobacco, and Vector as offering the best total returns. Dividend sustainability varies by stock in this group, but overall, there is a lot for income investors to like when it comes to these 6 tobacco stocks.
Turning Point Brands, Inc.
In fact, it’s stated goal is to continue to increase market share of its Liggett brand and maximize long-term profitability in that market. Excluding the acquisition of Swedish Match, net revenues still grew by an impressive 10.5%. Shipment volume was up 3.3% collectively, with cigarette shipment volume down 0.4% and heated tobacco, a much smaller portion of the business, up 26.6% year-over-year. Indeed, health organizations like the American Lung Association actively encourage localities to raise taxes on cigarettes and other tobacco products to discourage usage. Altria is taking a stake in the global business of Swiss tobacco company Burger Söhne (Helix Innovations with the On! brand) for $372 million on June 2019. This is the list of the largest public listed companies in the Tobacco industry from the United States by market capitalization with links to their reference stock.
Today, the overwhelming majority of smokers use fewer than 15 cigarettes daily. This has led to much lower volumes of total cigarettes sold, producing a declining total to be split up among the various companies selling cigarettes. The tobacco industry fits this model, despite declines over time in the number of customers that use its products. Tobacco stocks are particularly attractive to income investors thanks to their generous dividends and defensive characteristics during economic downturns. Tobacco stocks produce a lot of cash, but have very little capital expenditure needs, creating what could be considered perfect income stocks. List of the largest publicly traded largest publicly traded tobacco companies by earnings.
A few players in a big industry
Universal acquired FruitSmart, an independent specialty fruit and vegetable ingredient processor. FruitSmart supplies juices, concentrates, blends, purees, fibers, seed and seed powders, and other products to food, beverage and flavor companies around the world. The percent of the U.S. smoking adult population has steadily declined from 42% in 1965 to just 14% as of 2018.
For now, though, Altria looks poised to continue as an independent company, and it’s making strategic moves that are intended to ensure its survival even as cigarette smoking continues to wane. In addition, Altria has an ongoing partnership with Philip Morris International with respect to alternative products. The most important consequence of that collaboration is that Altria will have the right to market the IQOS heated tobacco device in the U.S. market, paying licensing fees to Philip Morris along the way. However, the scope of the partnership is broader than just IQOS, giving both companies the ability to share in each other’s research and potentially line up their development strategies even further in the years to come. These are the tobacco stocks that had the highest total return or smallest decline in price over the last 12 months.
Tobacco companies need to find new ways to grow and diversify their businesses. The COVID-19 pandemic has had an impact on the industry, forcing plant shutdowns and slowdowns, and it even affected duty-free sales for Philip Morris. Altria’s 9.5% stake in Anheuser-Busch InBev (BUD 3.25%) gave it additional exposure to the crisis; alcohol contracted significantly when bars and restaurants trade bonds online around the world closed. Still, as part of the consumer staples sector, the tobacco industry won’t suffer any lasting scars from the pandemic. Stock prices for tobacco companies have mostly recovered since their sharp declines at the beginning of the pandemic. Unlike some of the others we’ve looked at, Vector is making no attempt to diversify away from cigarettes.