The Nifty Fifty: Forty-Three Years Later

In 1972, the Morgan Guaranty Trust (in conjunction with a few other investment advisory companies) launched an advertisement push called the “Nifty Fifty” that proclaimed certain American companies were so dominant, they should be purchased and never sold. The intuitive appeal of this argument was obvious—people will always need food, beverages, medicine, and so on—and the companies included on the list all had excellent records of making shareholders rich, with the popular terminology at the time calling them “blue-chip stocks” rather than “dividend growth stocks.”

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Altria Stock Has Gotten Expensive

One of the reasons why tobacco stocks had historically been successful long-term investments is because tobacco stocks were cheap, the dividend was high, the dividend increased over time, and these three factors interacted quite well for that that chose to reinvest in companies like the old Philip Morris. But when you look at where Altria is at right now, in terms of valuation, it is as if investors have discounted the incredible risks that come with the territory of investing in a highly regulated, declining industry.

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