How to Invest in Tobacco Stocks
Tobacco stocks have been long-term winners for investors, but the companies that have been so successful in the tobacco business find themselves in a period of transition. With the adverse health impacts of cigarette smoking continuing to attract the attention of regulators and consumer advocates, even some of the largest tobacco companies in the world are looking at making the move away from traditional cigarettes toward alternative products that they hope will offer the same appeal to their customers but without some of the risks associated with smoking. At the same time, tobacco companies have looked to diversify their businesses, adding exposure to other industries to offer some protection in the event of a worst-case scenario for their core tobacco units.
Investors seeking the best tobacco stocks have some options in deciding how to get exposure to the sector. With only a handful of major tobacco companies in the U.S. market, you won't find any exchange-traded funds that concentrate solely on tobacco, and the one ETF that specifically includes tobacco stocks in its investment objective is relatively small and has a lot of other holdings in its portfolio.
Fortunately, for those who are comfortable taking on individual company risk, putting together your own portfolio of tobacco stocks isn't as hard as many people might think. We'll go through each of these investing options in much more detail below.
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