Sep 30 2005
Dividend Paying Sin Stocks – Follow Up
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As a follow up to this post, there has been some developments with tobacco companies up here in the Great White North. It appears that the British Columbia government is going to sue Rothmans in order to recover billions of dollars in health-case costs. These types of lawsuits are a definite risk of investing in “sins stocks”. The biggest risk here is that if BC wins, then the other provinces will undoubtedly line up to get their “cut” of the damages.
Given this risk, the “investor always looking for a good buying opportunity” in me has come out swinging. What is the price drop based on – media reports. There is no lawsuit yet. This statement from the article sums up where this sits right now:
“Furthermore, the time to trial will be extensive in nature and very likely will take a number of years. It has been the policy of tobacco companies the world oer to pursue many legal instruments, technicalities, and court procedures as possible to delay the start of the trial. We have no doubt similar tactics will be used.”
The drop in price is based on nothing more than speculation at this point. As a result, the yield has shot up and perhaps made for a good buying opportunity.
I won’t be buying though. I don’t buy based on speculation and I feel that buying this stock today would be a pure speculation play. We have no idea what will come out it. I would much rather put my money in a stock with some certainty** than something that is so up in the air. That is just my opinion though. Let me know what you think.
**Note: There never is any certainty, even with the best of stocks.
