The No. 2 and 3 U.S. cigarette companies, Reynolds American (NYSE:RAI) and Lorillard (NYSE:LO.DL), 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.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.