Out Fox The $treet

Summary Lorillard and Reynolds American merger approaches FTC decision. Lorillard hit new highs over $70 this week. With a high PE multiple, the downside risk appears to far outweigh any benefits from holding the stock to collect the merger discount. After years of owning Lorillard (NYSE: LO ) and benefiting from high dividends and stock buybacks, the recent stock action presented the opportunity to exit the stock. In addition, the current stock price faces risks from any issues with the Federal Trade Commission blocking the Reynolds American (NYSE: RAI ) merger or requiring further divestitures beyond those already proposed in the transaction. Read the full article on Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

Both Lorillard (LO) and Lockheed Martin (LMT) were added to the Net Payout Yields portfolio. This model is now available on Covestor . Lorillard provides a 5.4% dividend yield in addition to a generous buyback over the last 12 months making it's Net Payout Yield of 11.8% one of the highest yielding stocks with a market cap in excess of $10B. Tobacco stocks continue to pay high dividends as investors ignore them because of their social believes. At Stone Fox Capital, we strive for the highest legal return and if you wish any gains from a socially unacceptable stock can be given back to charity.  Lockheed Martin also provides a very generous dividend yield of 4.4% combined with a big buyback for a NPY of 11.8% as well. Defense stocks have been under pressure of late with expectations for cutbacks in the US. Apparently management disagrees whether they expect higher sales in emerging markets to fill in holes as the US cuts back or if the US just doesn't cut that many programs. ...