I think that Sin Stocks are an interesting topic, So I thought that today I'd do a brief post about them, and why I have one in my portfolio. First off, lets try to go over what exactly a Sin Stock is; A Sin Stock is generally any stock of a company that provides a product or service that people have moral judgments against. Now, there are so many people out there with different morals, so a sin stock for you, might not be a sin stock for me. For example, someone might not like ice cream, so any company that produces ice cream would be against their morals to own, but in general there are three types of stocks that are your main 'Sin Stocks', these are Alcohol, Tobacco and Casinos.

So if these are such horrible companies why do people (myself included) invest in them? Well, I personally try to not allow my moral objections against a company interfere with my investing picks. I invest to make money (also because its fun,but thats for another day), so In order to make money, I have to make sure I am choosing solid companies who's numbers all come together into something I like. Generally speaking Sin Stocks are good investments because the companies try and deliver to peoples addictive nature. When times are tough, you are going to find more people using Sin Products, this is because it makes them feel good (alcohol and cigarettes), or because they think they will hit the big one and all their troubles will go away (casinos). So this means, when other stocks are doing poorly, sin companies are usually making more money, and are a little bit of a hedge against a poor economy. I believe that regardless of what I do, people are always going to drink, smoke cigarettes, and gamble, so why shouldn't I profit from them?

I personally don't smoke, nor have I ever smoked, and I would never want anyone else I know to take up smoking, but I do own stock in Rothmans Inc. (TSE: ROC). Why? Well, no matter what I think of smoking, it is an addictive practice and there are lots of people out there that smoke... a lot.... Plus, when times are hard (recession anyone?) people have a tendency to start smoking again, or start smoking more frequently. As well, here in Canada, cigarette companies are not allowed to advertise in the traditional sense, so they do not need to spend all that extra money on advertising, this frees up a lot of cash. Where can they spend this extra cash? can they put it towards growing the business? well, they are already in a no-growth industry, so only a small amount can go there. Where else? ah, I know, back to the investors! Rothmans Inc, has paid a steady and increasing dividend for a long time. and lets not forget about the 'special dividends' they like to throw out every couple of years. All in All, as a dividend based investment, Rothmans is a very good choice, Next time you are feeling a little sinful, do a bit of analysis on Rothmans, and see if it passes your criteria.

I will probably highlight Sin Stocks again in the future, but for now, ask yourself if you have any moral objections against investing in Sin Stocks, because there are many good solid companies that people pass up on, just because they are 'sinful'. Oh, and one more point, if you are a smoker, drinker or gambler, take a moment and think... Why not make it a bit cheaper on yourself and own a piece of the companies that supply you with the very products that you are paying for?

Full Disclosure: I currently own shares in Rothmans Inc (TSE: ROC)

Disclaimer: Any information contained in the above article represents my opinions only, and should not be construed as personalized investment advice. I cannot assess, verify or guarantee the suitability of any particular investment to any particular situation and the reader of the article bears complete responsibility for its own investment research and should seek the advice of a qualified investment professional that provides individualized advice prior to making any investment decisions. All opinions expressed and information and data provided therein are subject to change without notice.