Tobacco Market a Hard Business

Somebody forgot to tell investors that cigarettes are a declining business.The S&P 500 tobacco index has beaten the market, jumping 13% so far this year after surging 36% in 2011. While the U.S. tobacco industry must wrestle with falling cigarette sales, rising taxes and potential litigation headaches, dividend hunters can't kick the industry's lush payouts. "The products tobacco companies make are abhorrent, . . . but they are amazing businesses," says Darren McKiernan, a portfolio manager with Invesco Canada. "The beautiful thing about it is that these companies generate so much cash," he added. "They pay out 50% to 75% of their earnings in the form of dividends, and they buy back stock."

Council Passes Tobacco Regulation

Compliance checks will be conducted on the 16 stores that sell tobacco in Malibu to ensure tobacco is not being sold to minors. The council also approved an amendment to the city's Local Coastal Program and agreed to hold a fourth public meeting of Busch Drive property owners to discuss clearing encroachments from the road.

To fight what critics call the glaring problem of tobacco sales to underage youth in Malibu, the City Council passed an ordinance at its regular meeting Monday night requiring the 16 stores that sell tobacco in Malibu to register with the city for a tobacco license. The council also agreed that a fourth public meeting should be held with Busch Drive property owners to discuss clearing encroachments along the road, and approved an amendment to the city's Local Coastal Program that will likely affect only very wealthy beachfront property owners.

The “Tobacco Retailers Registration Ordinance,” as it is officially called, will go into effect Nov. 14. Once registered, the stores would be subject to three undercover sting operations per year to assure compliance. The operations would involve a young person, called a “youth decoy” and hired by the city, attempting to buy tobacco products from the stores.

New Steps of Regulating Tobacco Sales

The Government is expected to soon reveal new steps regulating the sale of tobacco and Glamour cigarettes. Sources say that England’s Department of Health will later introduce legislation that would make it illegal for shops to keep tobacco products on display. Also expected is a Government consultation that would require tobacco companies to utilise plain packaging for all tobacco products.

The move would come as part of a larger scheme to reduce smoking rates, particularly for children and younger people. Currently, just over 20% of adults are smokers, and the figure has remained steady in the past several years after falling over previous decades.

England would follow a number of other countries with similar policies on smoking, including Ireland, Iceland, Finland and Canada. Meanwhile, Northern Ireland and Scotland are heading in the same direction.