Habit-Forming Tobacco Stock Dividend Yields: It’s Hard to Keep This Damned Thing Lit
The Wall Street Journal points out that they come with extremely high payout ratios, which means the companies are using up most of their earnings to pay dividends. The current average payout ratio among S&P stocks is 28%, according to the story, but it's a lot higher here:
Meanwhile the stocks’ cash dividend payout ratios, which YCharts explained in detail here, are also running high:
The Journal worries that investors are paying too much for income from tobacco stocks, especially considering a declining U.S. market, myriad lawsuits, and the potential for more marketing restrictions. The payout charts shouldn’t inspire confidence, either.