If you have been a dividend investor for long, chances are high that you have had to do some serious homework on the tobacco sector. After all, this sector is one of the highest yielding groups when it comes to dividends. There is a question we want to address later and that is taking the tobacco risk versus the telecom risk for close to the same dividends.

Wells Fargo has noted that the recent price wars may be abating and this will be great news for the tobacco companies. If it is great news for them, that is great news for dividend investors chasing higher and higher payouts. Wells Fargo noted that Altria Group Inc. (NYSE: MO) has maintained the pricing leader stance but that it has eased some of its promotional pricing after likely market share gains. Lorillard, Inc. (NYSE: LO) was listed as having growth in the Newport Menthol, while Reynolds American Inc. (NYSE: RAI) may have seen some gains in its Camel.

• Altria Group Inc. (NYSE: MO) is up 0.8% at $33.28 and its yield is 5.3%. Its 52-week trading range is $28.00 to $36.29 and the consensus analyst target from Thomson Reuters is $36.09.
• Reynolds American Inc. (NYSE: RAI) is up 1.7% at $43.00 and its yield is 5.5%. Its 52-week trading range is $38.95 to $46.93 and the consensus analyst target from Thomson Reuters is $45.56.
• Lorillard, Inc. (NYSE: LO) is up 0.8% at $39.56 and its yield is 5.2%. Its 52-week trading range is $35.61 to $47.02 and the consensus analyst target from Thomson Reuters is $43.89.

What investors need to consider is that domestic cigarette case volumes have been on the decline for close to a generation now. The tobacco companies have ben able to grow earnings due to a more steady and known legal and regulatory environment. After all, states and cities get great tax revenue from selling the deadly tar and nicotine delivery systems. It is also unlikely that even the more recent “lights” cases will do the damage that the old cases from the 1980s and 1990s brought. How many smokers right now can claim that they were not aware that smoking was bad for them and that they did not know smoking is deadly?

One other concern that is not addressed that often is the so-called “e-cigarette” that is a vaporized delivery of nicotine without the tar, without the burning of tobacco, and without the social reaction to the smoke.

Lastly, we would ask investors one question: would you rather take the tobacco risk for close to the same dividend as the telecom leaders? AT&T Inc. (NYSE: T) yields about 5.4% and Verizon Communications Inc. (NYSE: VZ) yields closer to 4.8%. Both stocks are equally down from 52-week highs and analysts have close to the same upside projections to the consensus price targets.

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