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Vector Group: Strong Earnings For This High-Yield Dividend Stock

Mar. 06, 2018 3:04 AM ETVector Group Ltd. (VGR)55 Comments
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  • Vector Group operates two unrelated but complimentary business lines: tobacco and real estate.
  • The company has a very high dividend yield and also pays a 5% stock dividend each year.
  • This article analyzes Vector Group's fourth-quarter financial performance and its total return prospects moving forward.

By the Sure Dividend staff

Vector Group (NYSE:VGR) is a unique investment opportunity for income investors.

What immediately stands out is the company's above-average dividend yield. Vector Group currently pays a quarterly dividend of $0.40, which yields 8.0% on the company's current stock price of $20.10.

This makes Vector one of just 428 companies in our investment universe with a dividend yield above 5%. You can see our complete list of high dividend stocks here.

In addition, Vector Group has paid a stock dividend of 5% each year going back to 1999. Including this unique dividend schedule and adding it to Vector's current yield of 8.0% gives the company an actual dividend yield (cash + stock dividends) of 13.0%.

Vector has other characteristics that also stand out. Perhaps most notable is the company's uniquely diversified business model.

Vector operates in two unrelated but complementary business lines: tobacco and real estate. This is beneficial for shareholders because the tobacco industry is an exceptionally stable component of the consumer staples sector, while real estate is much more volatile.

A last observation about Vector Group is the company's remarkable track record of outperforming the S&P 500 Index. You can view this outperformance in the following image.

VGR Vector Group Historical Stock PerformanceSource: Vector Group Investor Presentation, slide 17

On March 1st, Vector Group reported financial results for the fourth quarter and full year of fiscal 2017.

This article will analyze the company's financial performance in detail to determine whether it merits investment at current prices.

Business Overview

Vector Group is a holding company that operates in two unrelated but complementary business lines: tobacco and real estate. Each business segment does business through an operating subsidiary with an iconic brand name:

  • Tobacco: Liggett Group
  • Real Estate: Douglas Elliman

The company's tobacco segment is (by far) its largest when measured by

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This article was written by

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Sure Dividend helps individual investors find high quality dividend growth stocks with strong competitive advantages suitable for long-term holding. The authors who write for Sure Dividend on Seeking Alpha are as follows:Bob CiuraBen ReynoldsJosh Arnold

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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