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Tobacco Giant Lorillard Declares Dividend

August 18, 2014 | About:
David Goodloe

David Goodloe

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Smoking has been declining in the United States for years, but one-fifth of the world’s population continues to smoke cigarettes, reports the American Cancer Society’s Tobacco Atlas, which has led to a 13% overall increase in cigarette consumption in the last decade.

In what may be a sign of the resistance of some smokers to kicking the habit, the cigarette business has been so good lately that Greensboro, North Carolina-based Lorillard Inc (LO), the third-largest manufacturer of cigarettes in the United States through its Lorillard Tobacco Company subsidiary, declared a quarterly dividend of 0.615 Friday.

The dividend will be payable Sept. 10 to stockholders of record in the company as of Sept. 1.

In the first half of this year, Lorillard’s retail market share increased to 15.1%, up nearly half a point. The retail market share of Lorillard’s most popular brand, Newport, also increased to 12.9%.

In July, it was announced that one of Lorillard’s leading competitors, Reynolds American (RAI), will purchase Lorillard for $27.4 billion. The cash-and-stock deal translates to $68.88 per share. Lorillard’s stock sold for $60.75 a share when the markets closed Monday.

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Two years ago, Lorillard acquired the leading e-cigarette company in the United States, Blu. E-cigarette sales have increased as consumption of traditional cigarettes has become less socially acceptable, but Lorillard agreed to divest itself of e-cigarettes to clear the path for the deal.

About the author:

David Goodloe
I'm a journalist by training. I grew up in Arkansas and earned my B.A. at the University of Arkansas. I earned my master's degree at the University of North Texas. My background includes stints at newspapers in Arkansas and Texas and teaching news writing and news editing to students at the University of Oklahoma and Richland College here in Dallas. I'm the editorial manager at GuruFocus.

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