You sure you can handle the truth? 
Disclaimer, I own MO and BTI. About 3% of my port so enough that I care, but purely an income game for me because that has mostly worked for years if I was careful with my entry. Under my definition of yield trap they absolutely are. The dividend is great, but history says you may give all or most of it back in capital loss. They have clearly been traps the past five years, and here is why I believe that may continue.
-Core business is not growing, and it's highly likely it ever will.
-Regulators are on them constantly. Always looking for a new way to squeeze them (menthol ban)
-They try to invest in a safer alternative and the GOV still fights them.
-Unending threat of increased tobacco taxes. It just kills volume. Already insane in major cities/states right at $10 per pack. There is some limit.
-Forbidden by ESG and that is gaining momentum. Not going away.
-Everything MO has tried has turned sour. Rapidly dumping their investments of the past 5 years.
-BTI has similar struggles.
IMO they are nothing but a trade. I bought MO a lot cheaper and wouldn't be here still if not for option income games. They may be 10% higher in six months, or lower. I won't load up. There are better ideas out there with a better total return outcome likely. The fundamentals don't matter anymore beyond their ability to pay the next dividend. PEs are lower than historical because they are unending drama. The real problem for me is opportunity cost. All this happened while the market was flying and I don't want to know how they perform in a tough market when high quality stocks are cheap again. I hope I am wrong because I have some shares to dump. I was trying to leave MO at $50. If necessary I'll just keep selling covered calls and chiseling my basis down until I can leave at a cheaper price. I sold calls literally the day before this last dip.
Disclaimer, I own MO and BTI. About 3% of my port so enough that I care, but purely an income game for me because that has mostly worked for years if I was careful with my entry. Under my definition of yield trap they absolutely are. The dividend is great, but history says you may give all or most of it back in capital loss. They have clearly been traps the past five years, and here is why I believe that may continue.
-Core business is not growing, and it's highly likely it ever will.
-Regulators are on them constantly. Always looking for a new way to squeeze them (menthol ban)
-They try to invest in a safer alternative and the GOV still fights them.
-Unending threat of increased tobacco taxes. It just kills volume. Already insane in major cities/states right at $10 per pack. There is some limit.
-Forbidden by ESG and that is gaining momentum. Not going away.
-Everything MO has tried has turned sour. Rapidly dumping their investments of the past 5 years.
-BTI has similar struggles.
IMO they are nothing but a trade. I bought MO a lot cheaper and wouldn't be here still if not for option income games. They may be 10% higher in six months, or lower. I won't load up. There are better ideas out there with a better total return outcome likely. The fundamentals don't matter anymore beyond their ability to pay the next dividend. PEs are lower than historical because they are unending drama. The real problem for me is opportunity cost. All this happened while the market was flying and I don't want to know how they perform in a tough market when high quality stocks are cheap again. I hope I am wrong because I have some shares to dump. I was trying to leave MO at $50. If necessary I'll just keep selling covered calls and chiseling my basis down until I can leave at a cheaper price. I sold calls literally the day before this last dip.