Tobacco dividends safe, Citi says

They attributed their confidence to tobacco firms' resilience, adding that if their sales did slow, they still had recourse to reducing spending on so-called 'next generation products' or credit lines.

"Philip Morris, Altria, British American Tobacco, Imperial Brands and Swedish Match" will definitely be able to pay their interest bills, their maturing debt, their MSA fees plus their dividends in 2020, the analysts said in a research note sent to clients.

The MSA fees were due to at the end of April and the companies, most importantly Philip Morris, would need to tap the market for commercial paper or its credit lines to make payments.

Under a 1998 Master Settle Agreement with 46 US State Attorney Generals, the big four US tobacco firms had agreed to annual payments in perpetuity to the states to make up their healthcare costs.

And in practice, they did need access to capital markets to make "large and lumpy tax payments to governments," Citi said.

"By summer they will have generated the cash to pay this debt off. PM and Swedish Match are the strongest companies financially, but we are not worried about any of them."