Dividend Growth Stock Overview: Vector Group Limited

Vector Group sold more than 8 billion cigarettes last year.
Photo: Freeimages.com/loleia

About Vector Group Limited

Vector Group manufactures and sells cigarettes in the United States through its Liggett Group and Vector Tobacco subsidiaries. The company also owns a 70% interest in Douglas Elliman Realty LLC, which operates the largest residential brokerage company in the New York City metropolitan area. Vector Group is headquartered in Miami, Florida and employs over 1,300 people.

Vector Group operates its subsidiaries in three business segments. The Tobacco segment operates the Liggett Group and Vector Tobacco subsidiaries. Together, these companies sold more than 8 billion cigarettes last year under the Eagle 20’s, Pyramid, Grand Prix, Liggett Select and Eve brands. Vector specializes in discount cigarettes and sold 3.3% of all cigarettes in the United States. The bulk of Leggett’s customers are large grocery, drug and convenience stores, and candy and tobacco distributors. The Tobacco segment generates about 60% of Vector Group’s revenues and more than 90% of Vector Group’s operating income.

The E-Cigarettes segment was created in January 2014 with the introduction of the Zoom brand of e-cigarettes. To date, this segment has not generated a profit.

The Real Estate segment operates the company’s New Valley LLC subsidiary, which owns a 70.59% stake in Douglas Elliman Realty. Douglas Elliman operates the largest residential brokerage company in the New York City metropolitan area and has brokerage subsidiaries in upscale areas of the United States, including South Florida, Beverly Hills and Aspen. Douglas Elliman also purchases land for future development. The New Valley subsidiary generates about 40% of Vector’s revenues and 10% of Vector’s operating income.

Vector Group also has a small amount of other investments, including 8% each of a publicly traded financial services company and a publicly traded developer of premium alcoholic beverages.

The company is a member of the Russell 2000 index and trades under the ticker symbol VGR.

Vector Group’s Dividend and Stock Split History

Vector Group Dividends

Vector Group dividend growth has come from its annual 5% stock dividends.

Vector Group Limited has paid and grown dividends since 1999. The dividend increases usually come in the form of an annual 5% stock dividend. By keeping the dividend at the same level, you effectively receive a dividend increase of 5%. Since 2002, Vector Group has paid a dividend of $1.60 per share. The stock dividend is announced in conjunction with the company’s 3rd quarter dividend payment, which is announced at the beginning of September. This has given Vector Group a 5 and 10-year compounded dividend growth rate of 5%.

Aside from the 5% stock dividends issued annually since 1998, Vector Group has not split its stock.

Over the 5 years ending on December 31, 2015, Vector Group Limited stock appreciated at an annualized rate of 21.50%, from a split-adjusted $8.753 to $23.18. This dramatically outperformed the 10.20% compounded return of the S&P 500 index and the 7.44% compounded return of the Russell 2000 index over the same period.

Vector Group’s Direct Purchase and Dividend Reinvestment Plans

Vector Group does not have a direct purchase or dividend reinvestment plan. In order to invest in Vector Group stock, you’ll need to purchase it through a broker. Most brokers will allow you to reinvest dividends without any fee. Ask your broker for more information on how to set this up if you are interested.

Helpful Links

Vector Group’s Investor Relations Website

Current quote and financial summary for Vector Group (finviz.com)

 

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