Last night I purchased 17 shares of Lorillard at $115.54 which will pay me $105.40 per year. It ends up being a yield of 5.34% including commissions, no complaints there :) This purchase pushes my total annualized dividend income over $4200 meaning from this point forward I'll average $350 in passive income per month. I'm pretty excited about that.
It's actually my second choice in the tobacco industry as I do prefer Philip Morris. That said I cannot control market prices and right now I find PM to be a bit pricey and LO to be priced right. I believe I'm getting some value with this one and would be willing to pay more than I did. Of course I don't know where this stock or the market is headed short term. Would I find a better price if I wait? Hell if I know... All I can do is buy a stock when it hits my target price!
As I stated in a previous post this month, I like Lorillard for a variety of reasons. Obviously the yield is pretty strong with this one. Beyond the yield and the decent price I think I'm getting there is a business behind the stock. This business is in a cash cow industry that sells top notch addictive products. LO is geared towards menthol cigarettes. However they have been making a push into non menthol which is a bigger market. They also sell electronic cigarettes which I find interesting. Believe it or not people use those things! In addition Lorillard is extremely shareholder friendly. I anticipate double digit dividend growth as well as share buy backs.
In my personal life I've battled nicotine addiction with mixed results. It's an extremely difficult habit to break. One month I'm doing good, the next thing I know I've had a little too much bourbon and I'm doing my chimney impression. The hard part is that I do enjoy smoking... I know there is legislation and talks about label changes, this and that. At the end of the day it's my right to smoke. When I'm listening to recorded bugle music; saluting the flag every morning; I often reflect on the great freedoms we have in this country. I think tobacco is here to stay.