Goldman Sachs Loves 2 High-Yield Tobacco Stocks as Cigarette Smoking Continues Decline

Goldman Sachs is the acknowledged leader in the investment landscape on Wall Street and worldwide. The firm’s top-notch research department continues to provide institutional and high-net-worth clients with the best ideas across the investing spectrum and is likely to continue for years.

Founded in 1869, Goldman Sachs is the world’s second-largest investment bank by revenue and is ranked 55th on the Fortune 500 list of the largest United States corporations by total revenue. The Wall Street white-glove giant offers financing, advisory services, risk distribution, and hedging for the firm’s institutional and corporate clients.

Goldman Sachs provides advice, investing, and execution for institutions and individuals across public and private markets. At 24/7 Wall St., we have followed the company’s research for 15 years to bring our readers their top stock ideas. Recently, big targets on Strong Buy-rated dividend tobacco stocks caught our attention. While tobacco is an industry some would like to avoid there are some outstanding companies in the tobacco silo, and Goldman Sachs said this about the sector:

The US nicotine category is very attractive, in our view, with total volumes growing at a 2% CAGR over the past five years. The US is the world’s most profitable nicotine market ($25 billion profit pool today), and we expect the total profit pool to compound at a healthy 3.2% to ~$40 billion by 2035. Importantly, we forecast consumption of smoke-free nicotine products will surpass consumption of combustible products in volume this year and approach it in revenues & profits by 2035 as smokers continue to convert to reduced-risk alternatives.

Overall, it is no secret that the US nicotine market is in a state of flux, with widespread proliferation of illicit e-vapor products and a very slow FDA PMTA (pre-market tobacco product application) authorization process continuing to hinder the industry’s transition to smoke-free products and the creation of a viable market of FDA-authorized, reduced-risk alternatives for adult smokers.

Why do we cover Goldman Sachs dividend stocks?

Goldman Sachs dividend stocks provide investors with reliable streams of passive income. Passive income is characterized by its ability to generate revenue without requiring the earner’s continuous active effort, making it a desirable financial strategy for those seeking to diversify their income streams or achieve financial independence.

Altria

Altria Group Inc. (NYSE: MO) manufactures and sells smokable and oral tobacco products in the United States through its subsidiaries, and it is one of the world’s largest producers and marketers of tobacco, cigarettes, and related products.

The company provides cigarettes primarily under the Marlboro brand, as well as:

• Cigars and pipe tobacco, principally under the Black & Mild and Middleton brands
• Moist smokeless tobacco and snus products under the Copenhagen, Skoal, Red Seal, and Husky brands
• on! Oral nicotine pouches
• e-vapor products under the NJOY ACE brand

It sells its tobacco products primarily to wholesalers, including distributors and large retail organizations, such as chain stores.

Altria used to own over 10% of Anheuser-Busch InBev S.A. (NYSE: BUD), the world’s largest brewer. Earlier this year, the company sold 35 million of its 197 million shares through a global secondary offering. That represents 18% of its holdings but still leaves 8% of the outstanding shares in its back pocket. Altria also announced a $2.4 billion stock repurchase plan partially funded by the sale.

Goldman Sachs has its price target for the shares set at $61.

Philip Morris International

Philip Morris International Inc. (NYSE: PM) is an American multinational tobacco company with products sold in over 180 countries. This company has continued to grow its global market share. is one of the largest international cigarette producers, with a share of 28% of the global cigarette/heated tobacco market.

The company’s product portfolio primarily consists of cigarettes and smoke-free products.

Its smoke-free business (SFB) also includes wellness and healthcare products and consumer accessories such as lighters and matches.

The company’s segments include:

• Europe,
• South and Southeast Asia,
• Commonwealth of Independent States
• Middle East and Africa
• East Asia,
• Australia &
• PMI Global Travel Retail
• the Americas.

The company’s brands include Marlboro, HEETS, IQOS, IQOS ILUMA, TEREA, VEEV and ZYN.

Its IQOS smoke-free product brand portfolio includes heated tobacco and nicotine-containing vapor products.

Its international cigarette brands are Chesterfield, L&M, and Philip Morris. It also owns several local cigarette brands, such as Dji Sam Soe and Sampoerna A in Indonesia and Fortune and Jackpot in the Philippines.

Goldman Sachs has set a $175 target price.

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