How Much Money is in Tobacco?
My blog about Cornwall Councils pension investment in tobacco companies got me wondering on how much money is in tobacco. I knew the returns would be quite good, but I was staggered at how much really can be made by investing in this sector.
Take for example British American Tobacco (BAT). Their current share price is £28.22 and has given an increasing yearly dividend. In fact, this dividend has risen from 32p in January 2001 to 114.2p in December 2010. Click HERE for the BAT 2010 Annual Report. In the last 10 years the dividend has only risen.
It is only when you compare investment in tobacco companies with other sectors you really see how much money is to be made. If you took the starting date of 1st January 1986 till December 2010 the returns (approx) for the following sectors are as follows*
Non-life Insurance – 500%
Technology – 500%
Food Retail – 900%
FTSE – 1000%
Banks – 1500%
Oil and Gas – 2500%
Tobacco – over 9000%
Yes, over 9000% return. That is, a totally staggering return. In fact if it was not for the ethical reasons behind investing in this sector I would be saying Cornwall Council should be investing in more than 2% of its pension fund. There is not another sector that has this type of return. If you took out the ethical side, you would be saying as an investor put my money in tobacco.
It does get back to the original point of should Cornwall Council have an ethical policy for investments, or should profit/return comes first. If it’s the later, then stop breaching ‘healthy messages’ if you are going to invest in something that contributes to death.
*have original source