Investors turn to tobacco

With most of the Dow Jones Industrial Average, especially banks, taking a share-price hit following the UK’s vote to leave the EU, analysts said dividend-seeking investors were turning to US tobacco companies such as Reynolds American Inc. (RAI) that lacked international exposure, particularly in Europe, according to a story by Richard Craver for the Winston-Salem Journal, relayed by the TMA.

Dan Caplinger of The Motley Fool reportedly said that Altria Group and RAI “are as close to Brexit-proof as you’re likely to find in today’s stock market”.

This was due, he said, to low volatility, a reliable customer base and solid dividend yields, though he cautioned that both stocks “aren’t entirely free of risk”.

Caplinger said that both Altria and RAI had been focusing on the US domestic tobacco market and had taken steps to limit their international exposure, where the strong dollar had restricted profits.

However, he warned that the UK’s exit from the EU could have a substantial economic impact across the Atlantic; adding that “anything that hits discretionary income in Americans’ wallets could hurt tobacco companies”.