Investing in tobacco

Investing in tobacco is an attractive way to make money. This is because the number of people who smoke is still increasing worldwide, despite high excise taxes and many anti-smoking campaigns in various Western countries. There is a rapid increase in the number of smokers, especially in many emerging economies. There are many ethical objections to investing in tobacco. Read all about it in this article. Investing in tobacco is a very attractive way to make money. It is one of the fastest growing sectors on the stock exchange. In December 2012, it emerged that the fastest risers in the Bloomberg European 500 were mainly tobacco companies. The Bloomberg European 500 is an index of the five hundred largest stock exchange funds in Europe. Since the outbreak of the European Credit Crisis, the prices of cigarette manufacturers have risen by 78 percent. This is very remarkable because the entire index has fallen by as much as 29 percent. The stock markets have still not recovered from their pre-crisis peak levels. It is therefore special that the prices of the tobacco companies have risen so quickly.

Investing in tobacco

After the credit crisis, many investors started looking for other forms of investing. The crisis was caused in 2008 by the collapse of the American housing market. House prices are plummeting and many mortgage holders were no longer able to repay their mortgages. As a result, many banks got into trouble and went bankrupt or were kept afloat by the various governments. Stock prices also fell. This process was repeated during the European debt crisis. As a result, many investors, such as private individuals and investment funds, started looking for safer forms of investing in which to invest their money.

Investing in tobacco companies

Tobacco manufacturers are very attractive because the number of smokers is still increasing. In the Netherlands and Europe, prices are still rising due to excise duties and there are many anti-smoking campaigns, so the number of smokers is declining. In emerging markets, the number of smokers is still increasing. This is partly because the population of countries such as India and China is still growing rapidly, but also because there is less of a stigma attached to smoking itself. The level of prosperity is also increasing. As a result, many users are also switching from local brands to top brands. These are often the funds that are listed on international stock exchanges. This increases the tobacco companies’ profits and allows them to guarantee high dividends. A company like Philip Morris had a profit of more than eight billion dollars in 2010. She was able to pay out three dollars in dividends per share. The trend indicates that the demand for cigarettes will continue to rise in the coming years. This guarantees a certain cash flow.

Ethical objections to investing in tobacco

There is a lot to do about investing in tobacco companies. This is because many people see it as something that is not ethically possible. By supporting these companies, you also support smoking, which is unhealthy. Various companies and pension funds have been confronted in the past for investing in tobacco manufacturers. For example, the Medical Specialists Pension Fund invests in tobacco manufacturers. Various health insurers have also invested in it. They make that choice because it is financially attractive. Due to external pressure, many health insurers have chosen in recent years to no longer invest in these companies. It is contrary to their objective, namely improving care. As a result, they lose a large part of their credibility.