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09-19-2019, 01:58 PM
(This post was last modified: 09-19-2019, 01:59 PM by Otter.)
Long-term, I suspect this media panic over vaping illness leads to small, unregulated mom n pop vape juice retailers being regulated out of existence, and the banning of imported vape carts from unregulated sources in China or elsewhere in Asia. Strict regulatory standards written by Altria lobbyists will be put into place, and they will end up with a near-monopoly on domestic vape sales through Juul.
Liking the $1 Billion share buyback as well. At these prices, that can retire a lot of shares and substantially reduce the overall amount that Altria is paying out to shareholders in dividends, and further allow them to raise the dividend, as they have for decades.
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All due to vaping issues. Anyone looking at CGC or CRON? Anyone know How much MO paid to CRON for each stock they own?
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(09-19-2019, 01:59 PM)vbin Wrote: All due to vaping issues. Anyone looking at CGC or CRON? Anyone know How much MO paid to CRON for each stock they own?
It looks like the majority of the reports to date relating to vaping illness involve black market THC vaping cartridges, or discounted (import/unregulated) off-brand nicotine cartridges where the THC or nicotine vape juice has been cut with an adulterant. One of the adulterants that has cropped up repeatedly is vitamin E acetate, which is used to cut THC in some of these cartridges. The vitamin E acetate is an oily compound that binds to the lungs, causing lipoid pneumonia. The onset of symptoms can occur in just weeks. The often-repeated news story regarding the 18yr old with the "lungs of a 70 year old man" concerns a young man who was vaping THC cartridges with Vitamin E acetate.
Given the circumstances of many of the reported cases, it is unlikely that Juul's pods, which have been on the market for years, are the culprit. Most of their customers would have been long-dead if that were the case.
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Forgot to mention the other day, but I picked up some ULTA in my trading account. The selloff seems a bit overblown, and this seem like a fair price for the growth opportunity going forward.
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09-19-2019, 02:57 PM
(This post was last modified: 09-19-2019, 03:05 PM by Kerim.)
(09-19-2019, 01:49 PM)Otter Wrote: (09-19-2019, 01:22 PM)stockguru Wrote: MO in a free fall. Lets hope a year from now we will all say what a great buy it was lol
Single-digit P/E, 5yr lows, 8.5% yield . . . panic like this is where the long-term money gets made.
Any MO shares you buy today will pay you back their entire value in a decade just with dividends.
Am considering transferring some funds out of a savings account to buy even more.
I just bought more MO as well, again. It is certainly hardest to buy when there is this much negativity, but it is just too cheap to ignore. Assuming no dividend cuts, just locked in 8.39 percent yield. Yeah, I'll take that.
Edit to add: And I don't think that dividend cuts are off the table with MO either. Their stated policy is to target an 80 percent payout ratio. By my math, for 2019 it could be over 90 percent. Yes, I think things would have to get *much* worse for them to actually cut (as opposed to slowing significantly until EPS catches up), but it is not unthinkable. (And the potential PM merger is a huge wild card...)
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(09-19-2019, 02:57 PM)Kerim Wrote: (09-19-2019, 01:49 PM)Otter Wrote: (09-19-2019, 01:22 PM)stockguru Wrote: MO in a free fall. Lets hope a year from now we will all say what a great buy it was lol
Single-digit P/E, 5yr lows, 8.5% yield . . . panic like this is where the long-term money gets made.
Any MO shares you buy today will pay you back their entire value in a decade just with dividends.
Am considering transferring some funds out of a savings account to buy even more.
I just bought more MO as well, again. It is certainly hardest to buy when there is this much negativity, but it is just too cheap to ignore. Assuming no dividend cuts, just locked in 8.39 percent yield. Yeah, I'll take that.
Edit to add: And I don't think that dividend cuts are off the table with MO either. Their stated policy is to target an 80 percent payout ratio. By my math, for 2019 it could be over 90 percent. Yes, I think things would have to get *much* worse for them to actually cut (as opposed to slowing significantly until EPS catches up), but it is not unthinkable. (And the potential PM merger is a huge wild card...)
How are you getting 90%?
The recent dividend raise was to $3.36 and they are expected to earn $4.20 in 2019, which is exactly an 80% payout ratio.
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(09-19-2019, 03:46 PM)EricL Wrote: How are you getting 90%?
The recent dividend raise was to $3.36 and they are expected to earn $4.20 in 2019, which is exactly an 80% payout ratio.
I guess I don't buy the $4.20 prediction. Using reported / diluted / GAAP numbers, they've earned $1.67 though the first half of the year. To make $4.20 per share for the year, they'd have to have back-to-back record setting quarters for the balance of 2019. I hope that happens, after I buy a few more shares, but I'm not holding my breath...
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09-19-2019, 09:22 PM
(This post was last modified: 09-19-2019, 09:22 PM by fenders53.)
I don't think dividend cuts are off the table either, but as long as they aren't extreme it will remain attractive. Hindsight is 20/20, but I am wishing they would have diversified away from industries that both political parties and the FDA have no problem bashing. Same could be said for Pharma though.
For now it is what it is. MO is a yield trap as anyone who has held it long lost half their capital. I'm in pretty deep now so I can complain here if I want. I guess the $52.50 covered calls I sold are going to expire worthless tomorrow? 
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crimsonghost747
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I personally don't see a good future for any of the tobacco stocks. I have been saying this for years already. Smoking is on it's way out, that is a fact in the western world and also very likely to happen in developing countries.
If, and that is a real if, they can keep paying those dividends then I don't think you'll go wrong with investing into MO here. But the fact is that they are looking at a payout ratio close to 100% (if you look at the real eps, not adjusted), and on a cash flow basis the current payout ratio is already 125% for the first half of this year. (3 billion divs paid, 2.4 billion cash from operations)
I'm not sure if the potential PM merger will help with the payout ratios but the way I see it, the current levels aren't sustainable unless something changes. That doesn't mean that they won't be piling on more and more debt to keep the div increase streak alive but I think we all know how that ends in the long term.
Picked up 30 shares of WRK. Initial position.
Picked up 31 additional shares of MO this morning.
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