03-09-2014, 12:08 PM
(03-08-2014, 07:31 AM)dividendventure Wrote: This is one stock that has interested me for a very long-time, the dividend performance and "loyal" costumer-base is just so good. Specially considering that it's one of the few stocks selling at a good price at the moment.
The reasons why I am having some trouble making the decision to pull the trigger are the high debt and the future of the tobacco industry. I can close my eyes to the debt because the interest rates are so low and they are actively buying stock back. But there seem to be so many regulation hurdles coming up, like Australia banning branded tobacco, how optimistic are you guys on this?
I'm not worried at all. I agree with you about the debt -- I don't like the numbers to be as high as they are, but it is a completely rational move given interest rates and the savings associated with the buybacks. Not to mention the huge cashflow to cover it all.
As to the headwinds facing tobacco and its eventual demise, I'm still not worried. These factors are well known and well understood, and have been features of tobacco investing for decades. Tobacco companies have thrived through the face of it. If anything, such concerns keep valuations reasonable. These concerns might make me a bit more hesitant to buy much more MO, but PM has the (rest of the) entire planet to work with. I think it will be long after I am gone before its opportunities dry up or regulations make their business model unprofitable.