The No. 2 and 3 U.S. cigarette companies, Reynolds American (NYSE:RAI) and Lorillard (NYSE:LO), announced a $27.4 billion merger on July 15. While the new business, which will keep the Reynolds American name, will still trail tobacco giant Altria (NYSE:MO) by a wide margin in terms of market share, the company should remain very profitable.

Smoking is bad for people, but is it good for business?

In this segment of The Motley Fool's Where the Money Is, consumer-goods editor Mark Reeth and analyst Sean O'Reilly discuss whether the merger will bless investors with large dividends and strong stock gains, and if it was smart for the company to drop blu eCigs during the deal.

Tobacco companies aren't the only smart dividend picks
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Mark Reeth has no position in any stocks mentioned. Sean O'Reilly has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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