What’s Next for Tobacco Giants As the U.K. Moves Towards a Smoke-Free Generation

In what is perhaps the biggest development for the tobacco industry in years, the U.K. is moving toward creating its first smoke-free generation. The country’s government plans to raise the legal age for smoking each year. Consequently, shares of tobacco giants British American Tobacco (NYSE:BTI), Altria Group (NYSE:MO), and Philip Morris International (NYSE:PM) are trending marginally lower today.

The U.K. government aims to make England smoke-free by 2030. Today, King Charles III confirmed in a speech to both Houses of Parliament that the government will introduce legislation to ensure that cigarettes cannot be sold to children aged 14 or lower and that the sales and marketing of e-cigarettes to children are restricted.

This development comes after earlier, UK Prime Minister Rishi Sunak indicated steps toward a future ban on smoking, which is a leading cause of preventable deaths in the country. So far, the consultation period over the U.K. government’s move to create a smoke-free generation has garnered over 12,000 responses.

If passed, the Bill would effectively “ban the sale of tobacco products to anyone born on or after January 1, 2009.“ While the current developments could have seemed highly unlikely only a few years ago, tobacco companies have been gradually moving in the direction of vaping, smoke-free, and nicotine products. Moreover, juicy and consistent dividends with a high yield have made these stocks a must-have in the portfolios of many a long-term investors.

Which Tobacco Share Is Best?

Nonetheless, a key black swan event could be other major tobacco markets following in the footsteps of the U.K. sooner than expected. Meanwhile, Wall Street sees the highest upside potential of 18.7% in Philip Morris with an average price target of $108.35. On the other hand, Altria offers a modest 10.8% potential upside but boasts the highest dividend yield of 9.3% among these three names.

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