Altria Delivers Another Big Dividend Hike (MO)

Altria Group, Inc. (NYSE: MO) has hiked its dividend.  While we saw a dividend hike earlier in the year, we had a few questions about its dividend coverage.  It seems those questions are answered now.  Not bad for a defensive stock trading near its 52-week high.

The dividend hike was raised by 8.6% to $0.38 per quarter for common shares versus the prior $0.35 dividend that had already been in place, generating $1.52 per year.  With shares trading at $22.50, this annualized dividend generates a yield of 6.75%.  That actually puts the dividend at the top of even all the DJIA components yielding more than the 10-Year and 30-Year Treasuries.

This $1.52 annualized payout compares to Thomson Reuters consensus estimates of $1.89 EPS for 2010 and $2.01 EPS for 2011.

The quarterly dividend is payable on October 12, 2010 to shareholders of record as of September 15, 2010. The ex-dividend date is September 13, 2010. The company said that this action reflects its intent to return a large amount of cash to shareholders in the form of dividends, and is consistent with the company’s dividend payout ratio target of approximately 80% of its adjusted diluted earnings per share.

This is the second dividend increase in 2010, resulting in an overall quarterly dividend increase of 11.8% since the beginning of the year. In February 2010, Altria’s quarterly dividend increased by 2.9% to $0.35 per common share versus the previous rate of $0.34 per common share.

Shares are still down 0.4% at $22.50 for the day versus a 52-week trading range of $17.28 to $22.99.

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JON C. OGG