I know it hasn't been popular to invest in the tobacco industry for quite some time now, which might explain (in part at least) the mediocre/poor performance of Altria Group's (MO) stock price. However, I recently read an article on the Motley Fool website which presented a good argument for Altria being possibly the "world's greatest investment." They made some good points about how stocks with slow growth and high yields can make stellar gains through reinvested dividends over a period of time.
I've owned shares of Altria for quite some time now and, after reading the article, have decided the best use of their dividends would be to reinvest and increase my stake in the company. Some may think this an insane move with tobacco use on the decline in the U.S. for several years now, but I seriously doubt that the industry will fold anytime soon. Basically what you have is a simple business model consistently churning out cash for shareholders. As a smoker, I have no qualms about investing in the tobacco industry. I'm sure there are plenty of people who would disagree.
Closed on my purchase of AGNC shares earlier in the week and collected some great dividends from Campbell's Soup, AT&T and Universal Insurance Group. The month is off to a great start, hope to see it continue through the rest of 2010!
Showing posts with label Altria Group. Show all posts
Showing posts with label Altria Group. Show all posts
Friday, November 5, 2010
Tuesday, March 16, 2010
WHERE DID MY TAX REFUND GO?
Seems a lot of people, around this time of year, find themselves asking where the money went from their tax refunds. If they were lucky enough to get a nice refund, chances are good that it's gone before they know it and they have little or nothing to show for it. I know because I used to do the same thing. I used to look at a tax refund as an opportunity to go on a spending spree. Then I'd suddenly find myself out of money and wondering where it all went.
This year I invested one quarter of my tax refund in Altria Group (MO:NYSE). With their dividend close to 7% and their price per share a little over $20 I think it will make another good source of dividend income for my portfolio. While I still believe that the Obama Administrations tax hike on tobacco products earlier this year has created an unfriendly environment for tobacco companies, I expect the Democrats to lose a great deal of power in the fall elections. With a recent NBC/WSJ poll showing Congress with only a 17% approval rating, it's most likely the Democratic party will lose congressional seats come election day. With their tax and spend approach to solving the nations problems it's my opinion that we'd be much better off with a more balanced, or even a Republican led congress, than the current Democratic majority.
Anyway, back to the tax refund. After investing 25% of the money, I took another 30% and paid off some high interest credit card debt. The remaining 45% I deposited in my savings account at my bank. I'm using that as a cash reserve for work I'll be needing to have done on my car soon.
While most of this may be of no interest to anyone other than myself, the point I'm trying to make is you should know exactly where your money is going all the time. Tax refunds, inheritances, rebates, lottery winnings or any type of windfall should be put to good use building future income and reducing debt, so you won't find yourself asking, "Where did the money go?"
This year I invested one quarter of my tax refund in Altria Group (MO:NYSE). With their dividend close to 7% and their price per share a little over $20 I think it will make another good source of dividend income for my portfolio. While I still believe that the Obama Administrations tax hike on tobacco products earlier this year has created an unfriendly environment for tobacco companies, I expect the Democrats to lose a great deal of power in the fall elections. With a recent NBC/WSJ poll showing Congress with only a 17% approval rating, it's most likely the Democratic party will lose congressional seats come election day. With their tax and spend approach to solving the nations problems it's my opinion that we'd be much better off with a more balanced, or even a Republican led congress, than the current Democratic majority.
Anyway, back to the tax refund. After investing 25% of the money, I took another 30% and paid off some high interest credit card debt. The remaining 45% I deposited in my savings account at my bank. I'm using that as a cash reserve for work I'll be needing to have done on my car soon.
While most of this may be of no interest to anyone other than myself, the point I'm trying to make is you should know exactly where your money is going all the time. Tax refunds, inheritances, rebates, lottery winnings or any type of windfall should be put to good use building future income and reducing debt, so you won't find yourself asking, "Where did the money go?"
Saturday, May 30, 2009
My Thoughts on the New Tobacco Tax
The Obama administration, in their infinite wisdom, decided to help out the poor by providing additional funds for health care through a massive tax increase on tobacco products. While helping improve health care for the poor is an admirable goal, I think it is doomed to fail.
Until 5 weeks ago, I was a cigarette smoker. I never really smoked more than a pack a day, so I guess I was never really a heavy smoker. At any rate, the increase in price on cigarettes, due to the new tobacco tax, was just the incentive I needed to quit smoking. I went on the patch and have had a pretty easy time of it. A friend on mine, who chain smoked for years, decided to try Chantix and has also stopped smoking. Not only that, but I've noticed when I go to the store to buy nicotine patches, there have been several times that they were sold out. So I'm sure a lot of other people have decided to quit smoking. You might say, good for us! It is a good thing to quit smoking. I've always known it, I just didn't want to quit. But now, like millions of fellow Americans I'm sure, I can no longer justify the expense.
So, I've concluded that the government has probably made a serious mistake in passing this new tax. While their intentions were good, their thinking was flawed. When the market can no longer bear the price, demand drops and therefor tax revenue from tobacco products decrease. So not only do they fail to raise money to finance health care for the poor, but they will also lose the tremendous tax revenues that they were already taking in from smokers. This program will no doubt cause a tremendous decrease in the sale of tobacco products in the U.S., which will cause those companies to cut back on employees and reduce business operations, leading to even further losses in tax revenues. Add to this, all of the people who will live longer by not smoking, thereby increasing their exposure to age related illnesses when they are likely to be on Medicare and Medicaid and not only will the government fail to help the poor, they will be exposing taxpayers to even more costs related to care of the elderly.
I have been a long term investor in Altria Group (MO), but have decided it's time to sell and re-invest the money in something with a more promising future. Perhaps Phillip Morris International. Don't get me wrong, I think smoking is a bad habit, but there are a lot worse things. At any rate, I think the tobacco industry is on the way out in the U.S., having been taxed and sued out of business.
Until 5 weeks ago, I was a cigarette smoker. I never really smoked more than a pack a day, so I guess I was never really a heavy smoker. At any rate, the increase in price on cigarettes, due to the new tobacco tax, was just the incentive I needed to quit smoking. I went on the patch and have had a pretty easy time of it. A friend on mine, who chain smoked for years, decided to try Chantix and has also stopped smoking. Not only that, but I've noticed when I go to the store to buy nicotine patches, there have been several times that they were sold out. So I'm sure a lot of other people have decided to quit smoking. You might say, good for us! It is a good thing to quit smoking. I've always known it, I just didn't want to quit. But now, like millions of fellow Americans I'm sure, I can no longer justify the expense.
So, I've concluded that the government has probably made a serious mistake in passing this new tax. While their intentions were good, their thinking was flawed. When the market can no longer bear the price, demand drops and therefor tax revenue from tobacco products decrease. So not only do they fail to raise money to finance health care for the poor, but they will also lose the tremendous tax revenues that they were already taking in from smokers. This program will no doubt cause a tremendous decrease in the sale of tobacco products in the U.S., which will cause those companies to cut back on employees and reduce business operations, leading to even further losses in tax revenues. Add to this, all of the people who will live longer by not smoking, thereby increasing their exposure to age related illnesses when they are likely to be on Medicare and Medicaid and not only will the government fail to help the poor, they will be exposing taxpayers to even more costs related to care of the elderly.
I have been a long term investor in Altria Group (MO), but have decided it's time to sell and re-invest the money in something with a more promising future. Perhaps Phillip Morris International. Don't get me wrong, I think smoking is a bad habit, but there are a lot worse things. At any rate, I think the tobacco industry is on the way out in the U.S., having been taxed and sued out of business.
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