Sold Some Lorillard Inc. Today (NYSE:LO)

Lorillard, Inc. (Lorillard) is the manufacturer of cigarettes in the United States. Its Newport is a menthol flavored premium cigarette brand.


Reasons to buy this stock:

• Paid 6% dividend at purchase price of $75
• They also increase their dividends at a rate of greater than 10% per yr
• Their payout rate is 63%, so they have room to continue to increase
• They've increased their market share and units sold steadly over the past 10 yrs while other companies are declining
• http://si.wsj.net/public/resources/images/P1-AY905_LORILL_NS_20110104171206.jpg

Headwinds and Concerns:

• They were found liable for a lawsuit, about $200 mil or so
• They are appealing and if they do settle, it will be much, much lower
• Pending menthol assessment/investigation and non-binding recommendation to the FDA on whether to ban menthol (the minty flavor) or not
• They will not ban menthol
• http://www.streetinsider.com/Analyst+Comments/Lorillard+(LO)+Pops+on+Moodys,+Goldman+Saying+Menthol+Ban+Unlikely+(MO)+(RAI)/6376750.html

Implementation and Results:

I purchased this on August 4th 2010.

Purchase Price/Share:	$75.00
Sale Price/Share:	$95.60
Profit/Share:	$20.60
Shares:	20
Fees:	$14.00
Pre-Tax Profit:	$398.00

I also received three dividend payments totaling $3.55/share during this time.

27.47% in short term cap gain (20.60 / 75) + 4.73% from dividends (3.55 / 75) = 32.2% gain in 8 months or so.  Not bad.