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Dividend Mutual Funds to Watch on Negative Tobacco Verdict

cigarette tobacco mutual funds
Tobacco stocks will be in play today following this past weekend’s jury verdict of $23.6 billion in punitive damages against RJ Reynolds (RAI) in a lawsuit filed by the widow of a longtime smoker who died of lung cancer.
This news comes on the heels of news that Reynolds American Inc. will be buying Lorillard Tobacco (LO) the country’s No. 3 cigarette maker, in a $25 billion deal. That would create a tobacco company second only in the U.S. to Marlboro-maker Altria Group Inc.

In looking at some of the biggest holders of Reynolds American shares, we find Federated Strategic Value Dividend Fund (SVAAX) with nearly 6.2M shares, representing 4.19% of the fund’s overall assets. As well, Sunamerica Focused Dividend Strategy Portfolio (FDSAX) holds slightly over 5.1M shares, representing 3.67% of the fund’s overall assets.

Tobacco names have consistently faced litigation worries, but have been able to get verdict amounts reduced substantially to avoid any potential long-term business worries.

The Bottom Line

With this case taking headlines and the trend of cigarette smoking declining in the most recent decades, mutual fund managers may have to think how safe future dividend yields/payouts may be if an increase in litigation cases gets jury reactions as we saw this past weekend.

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Find out why $30 trillon is invested in mutual funds.

Why 30 trillion is invested in mutual funds book

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cigarette tobacco mutual funds

Dividend Mutual Funds to Watch on Negative Tobacco Verdict

Tobacco stocks will be in play today following this past weekend’s jury verdict of $23.6 billion in punitive damages against RJ Reynolds (RAI) in a lawsuit filed by the widow of a longtime smoker who died of lung cancer.
This news comes on the heels of news that Reynolds American Inc. will be buying Lorillard Tobacco (LO) the country’s No. 3 cigarette maker, in a $25 billion deal. That would create a tobacco company second only in the U.S. to Marlboro-maker Altria Group Inc.

In looking at some of the biggest holders of Reynolds American shares, we find Federated Strategic Value Dividend Fund (SVAAX) with nearly 6.2M shares, representing 4.19% of the fund’s overall assets. As well, Sunamerica Focused Dividend Strategy Portfolio (FDSAX) holds slightly over 5.1M shares, representing 3.67% of the fund’s overall assets.

Tobacco names have consistently faced litigation worries, but have been able to get verdict amounts reduced substantially to avoid any potential long-term business worries.

The Bottom Line

With this case taking headlines and the trend of cigarette smoking declining in the most recent decades, mutual fund managers may have to think how safe future dividend yields/payouts may be if an increase in litigation cases gets jury reactions as we saw this past weekend.

Sign up for Advisor Access

Receive email updates about best performers, news, CE accredited webcasts and more.

Popular Articles

Download our free report

Find out why $30 trillon is invested in mutual funds.

Why 30 trillion is invested in mutual funds book

Why 30 trillion is invested in mutual funds book

Download our free report

Find out why $30 trillon is invested in mutual funds.

Why 30 trillion is invested in mutual funds book

Download our free report

Find out why $30 trillon is invested in mutual funds.


Read Next