Richmond-based tobacco company Altria’s stock is performing relatively well, and has recently raised dividend payouts to shareholders. That’s despite several factors working against the company, including the COVID-19 pandemic with worse outcomes for people with tobacco-related health problems and an economic crisis.
David Brat, dean of the Liberty University School of Business, told The Virginia Star that increased stress from the pandemic and economic crisis may be causing more people to buy tobacco products. “Being cooped up in a house alone, with all the stresses of 40 million people losing their job status with the shutdown, 40 million people in the country had to cope with that. When people are in that kind of situation … it’s not surprising the usage [of alcohol and tobacco] goes up some,” Brat said.
Brat added, “Most people are aware of the health danger [of tobacco] involved in the first place, so that’s already baked in.”
“Then, on top of that, Altria has been one of those very solid performing companies over the long run, paying out solid dividends, very conservatively run in a business sense, they try not to make errors, they’re very careful, they go out of their way to avoid litigation, and they’re a well-run firm. And so if you put together any new burst in demand, that’s not a bad combination.” Brat cautioned that he is not an expert on Altria specifically.
Additionally, The Motley Fool notes that tobacco’s addictive nature makes for more stable product sales, and with more people at home, people have more time for smoking.
Tobacco’s strong performance has been matched by strong alcohol sales in Virginia, with the Virginia Acoholic Beverage Control Authority reporting a revenue increase of $117 million in 2020. Meanwhile, a rise in overdoses in Virginia suggests an increase in substance abuse.
“People want to opt out when reality is just really crushing them,” Brat said.
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Eric Burk is a reporter at The Virginia Star and the Star News Digital Network. Email tips to [email protected].
