Lorillard: Recommended Stock Purchase

I increased my tobacco engagement within the Dividend Yield Passive Income Portfolio. I purchased a new tobacco stock, the Lorillard. It’s the fourth company from the tobacco industry. The others are Philip Morris, Altria, and British Tobacco.

I love the high yield of the 15 billion tobacco player. For sure, Lorillard has a higher risk because of its low diversification and is much more under pressure because of its menthol cigarettes.

The current dividend yield amounts to 5.2 percent while the forward P/E is at 12.02. I believe it’s a great compensation if we exclude the risks of the company. Growth is also forecasted. Over the next five years, earnings should grow by 12.5 percent yearly.



Lorillard manufactures and sells cigarettes in the United States. The company operates through two segments, Cigarettes and Electronic Cigarettes. The Cigarettes segment manufactures and sells cigarettes. It offers 39 product offerings in various brand names, including Newport, Kent, True, Maverick, and Old Gold.

Lorillard is still a high yielding company despite the fact that stock price nearly tripled since the low in 2009. The company boosted dividends over the past six consecutive years. The three year dividend growth rate is at 17.3 percent, a very high value but debt ratios were also low during that time. Not Lorillard has over $3 billion long-term debt but also much lower outstanding shares. The debts were used for massive share repurchases.

For readers who are new to the matter and my dividend growth philosophy: I funded a virtual portfolio with 100k on October 04, 2012 with the aim to build a passive income stream that doubles each five to ten years. I plan to purchase each week one stock holding until the money is fully invested. The total number of constituents is expected at 50 – 70 companies and the dividend income should be at least at $3,000 per year.

The new Lorillard stake will boost my yearly passive dividend income by additional $65. The full year dividend income is now estimated at $2,330 and should grow over $3,000 by the end of this year if I fulfill my aim to buy each week a stock with an initial yield of more than 3 percent.

The full portfolio holdings are up 4.13 percent in average. Due to the slow purchase process which is part of the strategy, the whole performance since the date of funding is only 3.69 percent.