24/7 Insights
- Based on Altria Group Inc.’s (NYSE: MO) financials, its generous payout is rock solid.
- Plus, the tobacco stock has gained about the same as the S&P 500 this year.
Altria Group Inc. (NYSE: MO), the tobacco company, pays a dividend that produces an 8.1% yield. Based on the public corporation’s financials, the payout is rock solid. And if the yield is not enough, Altria shares are up 19% this year, the same as the S&P 500.
Altria stock’s attractiveness has been acknowledged several times this year. Recently, Investor Place added it to a list of attractive holdings. It was included among “3 Undervalued Blue-Chip Stocks to Buy at a P/E of Less Than 10.”
Altria has raised its dividend for 54 years in a row. Its payout ratio is over 80%, which means 80% of the company’s earnings go to shareholders.
Altria left its guidance intact when it announced its most recent quarterly earnings. “We reaffirm our 2024 full-year adjusted diluted EPS guidance range of $5.05 to $5.17, representing a growth rate of 2% to 4.5% from a base of $4.95 in 2023.”
In that quarter, revenue slipped 2% year over year to $5.6 billion. Net income surged 19% to $2.1 billion, and 88% of that total came from cigarette sales. Altria also had $3.6 billion of cash and cash equivalents on its balance sheet, and the current portion of its long-term debt was zero.
There is a theory that Altria keeps a high dividend to get people to invest in a tobacco company. This is an issue each investor will need to decide individually.
Be sure to grab a copy of our “2 Dividend Legends to Hold Forever” report if you are looking for more great stock ideas.
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