Investors love dividend stocks because they provide dependable income and give investors a great opportunity for solid total return. Total return includes interest, capital gains, dividends, and distributions realized over time. In other words, the total return on an investment or a portfolio consists of income and stock appreciation.

At 24/7 Wall St., we always remind our readers about the impact total return has on portfolios because it is one of the best ways to improve the chances of overall investing success. Again, total return is the combined increase in a stock’s value plus dividends.

For example, if you buy a stock at $20 that pays a 3% dividend, and it goes up to $22 in a year, your total return is 13%—10% for the increase in stock price and 3% for the dividends paid.

We did some comparison shopping to see which top dividend stock would be better in 2024. Not only will it have the largest dividend to provide stellar passive income, but it also has the potential to deliver the biggest total return. Two top companies squared off, and one was a decided winner.

Altria

This tobacco company offers value investors a great entry point and a rich 9.36% dividend. Altria Group Inc. (NYSE: MO) manufactures and sells smokable and oral tobacco products in the United States through its subsidiaries.

The company provides cigarettes primarily under the Marlboro brand;

• Cigars and pipe tobacco, principally under the Black & Mild brand
• Moist smokeless tobacco and snus products under the Copenhagen, Skoal, Red Seal, and Husky brands
• on! Oral nicotine pouches.

It sells its tobacco products primarily to wholesalers, including distributors and large retail organizations, such as chain stores.

Altria owns over 10% of Anheuser-Busch InBev (NYSE: BUD), the world’s largest brewer. In March 2008, it spun off its int’l cigarette business to shareholders.

Universal Corporation

While this company’s products, like Altria’s, may not be for everyone, they have strong demand, have been in business for almost 150 years, and offer shareholders a hefty 5.25% dividend. Universal Corporation (NYSE: UVV) processes and supplies leaf tobacco and plant-based ingredients worldwide.

The company operates through two segments:

• Tobacco Operations
• Ingredients Operations.

It is involved in procuring, financing, processing, packing, storing, and shipping leaf tobacco for sale to manufacturers of consumer tobacco products.

The company:

• Contracts, purchases, processes, and sells flue-cured, burley, and oriental tobaccos that are primarily used in the manufacture of cigarettes
• Dark air-cured tobaccos manufacture naturally wrapped cigars, cigarillos, and smokeless and pipe tobacco products.

Universal Corporation also provides value-added services, including

• Blending, chemical, and physical tobacco testing
• Service cutting for various manufacturers
• Manufacturing reconstituted leaf tobacco
• Just-in-time inventory management services
• Electronic nicotine delivery systems
• Customer smoke testing services

And the winner is…

In comparison, both are great ideas, as both are in the tobacco business, which, while slowing, remains extensive across the globe. Both also pay significant dividends; however, after closely looking at the two companies, Altria is the winner, and here’s why:

• Altria has by far the more significant dividend, 9.11% versus 6.33%.
• Altria trades at a slightly better multiple at 9.42 times earnings versus Universal’s 9.55 mark.
• Universal’s forward earnings estimates are unavailable on Yahoo Finance or MarketBeat. Altria is expected to earn $5.24 per share in 2025.
• Altria’s 10% ownership of Anheuser Busch InBev is a huge positive, as the Budweiser brewer is one of the world’s largest, with a portfolio of approximately 500 beers.
• Altria’s iconic Marlboro brand is the world’s best-selling international cigarette.

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