- VGR will spin-off its real-estate business in two weeks.
- The spun-off business will pay a dividend while to RemainCo (tobacco pure-play) continues to pay the established dividend - existing shareholders benefit from a de facto 25% raise.
- The spin-off will operate on the basis of a very healthy balance sheet while the RemainCo tobacco pure play retains the entire long-term debt.
- Management of VGR continues to reward shareholders in an overly-generous manner, risking another dividend cut a few years down the road when the debt requires refinancing.
- Yield-starved investors are better suited with an investment in VGR's much more profitable peers Altria and/or British American Tobacco.
For further details see:
Vector Group: Avoid The Tobacco Business After The Spin-Off