Investing

Altria a Safe Stock in a Dangerous Market

Douglas A. McIntyre

Published: April 16, 2024 6:35 am

The stock market has become unsettling. High interest rates will not go away because inflation will not go away. Oil prices have moved toward $100 a barrel, in part because of wars in the Middle East and Ukraine. The wars themselves could grow and destabilize countries that have been at war many times before. Investors have started to look for safe havens. Because people will not stop smoking, the huge tobacco company Altria Group Inc. (NYSE: MO) has been one for years.

Altria makes most of its money by selling Marlboro cigarettes, which often tops of lists of brands with high equity value. Altria was called Philip Morris until 1985, and then cloaked its cigarette company identity. It once diversified by owning Kraft, the food company, which it spun out to shareholders in 2007. Today Altria bills itself as “moving beyond smoking,” which it has not done yet. (See which cigarette brands you should never buy.)

Altria has an extraordinarily high yield of 9.57%. It trades in a narrow range. In the past year, this has been between $39 and $48 a share. The stock is not subject to wild fluctuations. No one will get extremely rich owning the stock, but they will not end up extremely poor either.

Altria’s results for 2024 were revenue of $24.5 billion, which was down 2% year over year. Earnings rose 43% to $4.57 per share. The company continues to buy back shares. The latest announcement is that it would increase buybacks by $1 billion. Altria sits on $3.7 billion in cash and cash equivalents that it will probably never need. It throws off cash every quarter.

Investors who want a solid stock in an uncertain market should look at Altria’s powerful brand and its earnings, yield, and balance sheet.

∴