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Actionable news in RAI: REYNOLDS AMERICAN Inc,

The Preferred Way To Buy Reynolds American

Summary

RAI has an amazing track record of raising its dividends.

These dividend increases have “pulled” the stock price upward.

In light of RAI's decreasing yield, I recommend seasonal position adding for those looking to add to their positions.

Having performed a dividend analysis on Altria Group (NYSE:MO), it seems only natural I do the same for Reynolds American (NYSE:RAI). After all, these two investments are so similar in their products and revenue source that many investors are faced with choosing between these two investments. Of course, you shouldn't be putting all your eggs in one basket, but sometimes it makes sense to enlarge one basket at a time.

In the previous article on RAI, I noticed some confusing regarding the dividend and its payout. So, I'm throwing in my analysis to definitively explain the issue of RAI's dividend.

Dividend Analysis

RAI has an amazing track record of raising its dividends. We've seen dividend increases of up to 20%:

These dividend increases have "pulled" the stock price upward:

Still, the dividend increases have been slow from the standpoint of yield. The yield has consistently fallen over the years, from 10% to the current sub-4% yield:

This is mainly a result of the strong stock price growth, which has also led to three stock splits. Even so, such a phenomenon can be discouraging...


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