Altria Group Inc (MO), Philip Morris International Inc. (PM): What’s The Best Way To Beat Mr. Market

For many people, an investment in a tobacco company is a risky investment.  With people pushing towards a healthier lifestyle, and government campaigns against tobacco and smoking, there are plenty of reasons to be skeptical.  However, these companies have showed growth in the past, and could continue to grow in the future.  Additionally, some people may not have the money to buy many stocks individually.  For these people, an ETF is a great way to gain exposure to these companies, as well as other companies in the same industry (or whatever industry you want).  Additionally, ETFs provide good diversification within a specified market, and can avoid many of the diversification problems associated with picking individual stocks.

To invest in an exchange-traded fund with either or both of these companies, you will need to find ones that are invested in consumer staples. Below are two examples.  However, these companies are held by many ETFs, so do not limit yourself to these alone.

Launched in December 1998, Consumer Staples Select Sector SPDR Fund corresponds with the S&P Consumer Staples Select Sector Index. It has an expense ratio of 0.18%. It has 43 stocks among its holdings, including Philip Morris as the third-largest holding (10.16%) and Altria as its seventh-largest (4.27%). The fund has a year-to-date return of 18.23%, a one-year return of 23.18%, a three-year annualized return of 17.42%, a five-year annualized return of 10.93%, and a 10-year annualized return of 10.45%.

Launched in January 2004, Vanguard Consumer Staples ETF has 103 stocks and tracks the Vanguard Consumer Staples index. Philip Morris International Inc. (NYSE:PM) accounts for 8.8% of its holdings, the third highest, and Altria Group Inc (NYSE:MO) accounts for 4.16%, the seventh highest.

The takeaway

Overall, whether you are interested in Altria or Philip Morris International Inc. (NYSE:PM), it is good to understand these companies, the industry, and the role these companies can play in your portfolio.  Perhaps the most important part for any portfolio is remaining diversified, and companies such as Altria and Philip Morris, and especially ETFs, can help you achieve this goal.

The article Tobacco Industry: A Healthy Investment? originally appeared on Fool.com and is written by Daniel Murray.

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