Altria Breaks New Ground

Altria (NYSE: MO) -- more recognizable by the name Philip Morris for the purposes of this Take -- has been courted by the state of Virginia to construct a new research and technology facility in downtown Richmond. It will conduct research into new tobacco products -- can you imagine the possibilities if it hits upon a "safer cigarette"? It remains, of course, to be seen how its research will pan out.

Many of us know that Big Tobacco has deep roots in the southern portion of the U.S., and Richmond has been on the map for a while -- Philip Morris has plenty of corporate offices and facilities there. However, the point hits home for me because my grandfather spent his boyhood in Richmond, and he used to regale me with many tall tales concerning his mischievous youth there, where he was always getting into some kind of good-natured scrape with the general end result of hearing "Just wait till your father gets home."

The delightfully un-PC story that pops to mind is one in which he and his boyhood pals used to go to the cigarette factory and wave to or flirt with the girls who worked there, and those girls would throw free cigarettes down at them from windows high above. The scamps would then smoke and subsequently get into trouble. How tall a tale this is, I don't actually know, and neither does my mother, considering how as he grew older, he'd downgrade how old he was when he'd get the contraband smokes ("I was 15!" "I was 13! "I was 11!"). These days, anyone giving cigarettes to minors would likely be beaten soundly with a stick, but those were the days of the wild frontier -- kind of like how when I was a kid, when nobody wore seat belts or realized drinking and driving was not such a good idea, and kids used to roll around in the back seats of cars like pinballs. But I digress.

All right, that's enough Richmond-and-tobacco-and-wild-frontier nostalgia for now. Outbidding North Carolina for the R&D facility, Virginia offered Altria $15 million in incentives, according to The Associated Press. The state donated the land the facility will stand on, and Altria will enjoy a 40% reduction in real estate taxes for two years and $3 million in federal highway money for the road construction one would expect for such a project.

Of course, investors can come up with a whole variety of questions about this new facility. Will enough R&D yield a safer cigarette? (And, I might add, would a "safer cigarette" carry as much naughty allure? I've often wondered about that. Think of Fool writer Seth Jayson's recent look at the College Debauchery Index.) Will Altria unearth more research that in addition to the proven serious side effects, nicotine has some health benefits, which some studies have had the audacity to allude to? Will its research help or hinder the industry?

Regardless, Altria and its tobacco arm are still big business -- indeed, big enough to venture a price hike -- for investors who are willing to take stock in sin and absorb the inevitable risk. The stock sweetens the deal with dividends and currently trades at a low P/E of 14, reflecting the very real risks that are inherent in its addictive, dangerous, and much-maligned industry.

At the very least, the new facility ostensibly provides the kind of "we're-not-so-bad" PR that tobacco companies covet. After all, they navigate a difficult path among a product that can have severe health effects, a client base that is largely addicted (quite a catch-22, there, given the negative health impacts), the vagaries of public sentiment, and the mysteries of marketing in such a singular environment.

Do you look to sin stocks for dividends? Mathew Emmert scopes out dividend-paying stocks every month in Motley Fool Income Investor .

Alyce Lomax does not own shares of Altria. She knows that one day soon she should start spending some time getting some tips on the Fool's Quitting Smoking board.