Karelia offers high yield but limited upside due to family control
Greek tobacco company Karelia offers a 3.5% dividend yield and a valuation below 4x earnings. However, family control of nearly 95% of shares limits liquidity and growth potential for outside investors.
Karelia, a Greek tobacco company founded in 1888 with fewer than 600 employees, accounts for 1% of all Greek tax revenue, having paid over €700 million in direct and indirect taxes. The company is valued at €1.2 billion on the stock exchange. It sold over 18 billion cigarettes last year in more than 50 countries, with three-quarters of its €350 million revenue coming from abroad. Karelia holds €720 million in cash after deducting debt, meaning its valuation is less than 4x earnings. The stock offers a 3.5% dividend yield, but the family owning nearly 95% of the shares is conservative and the remaining 5% of tradable shares are illiquid. The family's internal disputes and lack of incentive to sell or increase payouts limit the stock's appeal to larger investors, making it function more like a stable bond with low growth potential.