The tobacco industry saw solid growth last year on an unusual rise in smokers due to pandemic-linked stress and lock-down blues, and on consumer demand for next-generation smoking products. Also, with rising Treasury yields and anticipated inflationary pressures, it makes sense for investors to buy high-yield stocks. So, against this backdrop, we think Altria Group (NYSE:MO), Imperial Brands (OTC:IMBBY), and Schweitzer-Mauduit (SWM) could be solid picks now.The United States saw a rising number of smokers in 2020 because of COVID-19-pandemic-led stress and depression. In recent years, the number of smokers has declined by 3-4% per year. To mitigate the health implications amid the rising demand, tobacco companies have been researching and launching next-generation, low-risk tobacco products, including moist snuff or e-vapors. As the harmful effects of smoking are reduced in the future by these next-generation products, the number of smokers is expected to rise globally. The global tobacco market size is likely to expand at a CAGR of 1.8% over the next seven years to generate $1.07 trillion in revenue by 2028.
Also, tobacco companies are collaborating with others to secure U.S. Food and Drug Association’s (FDA) approvals for their product pipelines. As a result, the next-generation tobacco products are likely to generate significant revenues for these companies. Furthermore, to attract investors, many tobacco companies are increasing their dividend yields.
Thus, we think high-yield tobacco companies Altria Group, Inc. (MO), Imperial Brands PLC (LON:IMB) (IMBBY), and Schweitzer-Mauduit International , Inc. (NYSE:SWM) are ideal investment bets now.