Still Smoking, Altria's Big Dividend Hike Lesson (MO, RAI, VGR)

Companies and Brands

Published: August 26, 2011 9:06 am

Last Updated: April 28, 2020 5:32 am

Altria Group Inc. (NYSE: MO) has made good on a dividend hike we have been expecting. The domestic tobacco giant has now increased its regular dividend by almost 8% to $0.41 per common share per quarter. The prior dividend was $0.38 per common share per quarter.

The new annualized dividend rate is $1.64 per common share and the $26.01 share price and that generates a new dividend yield of 6.3%. That is even above our mid-point of the latest Great Dividend Portfolio for Uncertain Times recently published.

Altria targets roughly an 80% payout ratio of its income for dividends. It is not exactly like it is looking for huge acquisitions ahead.

The best statistic is this… Altria has increased its dividend 45 times in the last 42 years.

Reynolds American Inc. (NYSE: RAI) is probably another two quarters out before another dividend hike is announced, and its current yield is about 5.85%. Vector Group Ltd. (NYSE: VGR) could have a hike at any time, but the $0.40 per quarter payout with an $18.27 price generates a current dividend of 8.7%.

It is amazing to be in a business that kills the customers and earnings can keep rising and rising.

JON C. OGG

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