There is perhaps no more hated industry in market history than tobacco. But since 1926, no industry has delivered better total returns, and on a risk-adjusted basis, tobacco is #2.
Over the past 33 years, Altria and British American have delivered 18% and 14% CAGR total returns, respectively, “smoking” the S&P 500 while offering generous, recession-resistant and exponentially growing dividends.
Both companies have wide moat businesses, with proven track records of adapting to an endless stream of “existential” crises, which is why I recently bought both for my retirement portfolio.
From today’s valuations, 20% historically undervalued for MO and 25% for BTI, these defensive, high-yield blue chips can realistically deliver 12% to 20% CAGR and 19% to 25% CAGR total returns over the next five years, respectively.