Investing

The S&P 500 Stock With the Highest Dividend Is a Pure Cash Machine

Austin Smith

Published: February 15, 2025 8:36 am

24/7 Wall St. Key Points:

• Altria Group Inc. (NYSE: MO) offers the highest dividend yield in the S&P 500 (VOO), making it attractive for income-focused investors.
• Despite declining cigarette sales in the U.S., international demand and alternative products like vapor and nicotine pouches help sustain revenue.
• Litigation risks have largely been settled, and the company remains a strong cash generator with a stable balance sheet. 
• Are you ahead, or behind on your retirement goals? Most Americans don’t know, but you can learn the answer with a simple quick. Click here now to learn more. (sponsored)

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Transcript:

[00:00:04] Doug McIntyre: Lee, the tobacco business is good. Altria, which it owns Marlboro, that’s the thing that they make their money on. Yeah, they do now has the highest yield of any stock in the S&P. One of the reasons this is a cash machine.

[00:00:22] Doug McIntyre: The other one is something I, the other one is something I’m guessing at. I don’t know that. And is that you want to entice people to buy a tobacco stock because people who smoke cigarettes die. So, you sort of, well, if we give people a bigger dividend, maybe they’ll buy it. But I have said that Altria is a very, attractive stock for people.

[00:00:46] Doug McIntyre: Retirement age, near retirement age because it’s raised a dividend 55 times in 53 years. Yeah. Right. So, you’ve gotta love that. If you aren’t squeamish about owning a tobacco stock, I mean, there’s nothing like this company. This stuff is safe. The stock hasn’t been up as much as the S&P 500 in the last year, but it’s been very close.

[00:01:12] Doug McIntyre: Their last earnings were good.

[00:01:15] Lee Jackson: Very good. Very good. And, cigarette smoking has declined in the United States tremendously, but it hasn’t declined in China or Europe or any place else near as much. And we write about this a lot, and now jumping into the lead as the highest yielding stock in the S&P 500 is pretty big, and like you said, they’re a dividend king.

[00:01:37] Lee Jackson: which means they’ve resonated dividend for 50 plus years, which is huge. And that makes sense for, for people growth and income investors or older people are watching that are looking for a safe, dividend stock yeah, you got to hold your nose a little bit because cigarettes are out of favor in a big way. But they also make, the, little vapor. The pouches stuff that’s legal and vapor stuff that’s getting bought the NJOY brand of vapor products.

[00:02:08] Lee Jackson: And then of course they have the pouches and, the, kind of the dip sort of stuff that is maybe, not the best idea, but is certainly a better idea than smoking cigarettes and inhaling smoke. And plus people have to remember, even though they sold a good chunk of it last over 8 percent of Budweiser, you know, or Anheuser-Busch InBev (NYSE: BUD), which is the biggest brewer in the world.

[00:02:36] Lee Jackson: You got everything a lot of people don’t like, you got beer and ciggies. But yeah, if you’re an investor looking for a total return stock with solid and dependable dividends as you go, you’re right.

[00:02:48] Doug McIntyre: 8 percent and I would describe it as safe. A safe 8%.

[00:02:55] Lee Jackson: Yeah. And tobacco litigation from whatever it was 10 years, 15 years ago, that’s been prosecuted. That’s been adjudicated. You can’t go back on them now and sue them again because they paid out zillions to the states.

[00:03:10] Lee Jackson: States take that money an they already spent the mo on their costas.

[00:03:19] Doug McIntyre: Yeah, there is no litigation risk here. This is just, you think people are going to keep smoking, these guys have a lot of cash on the balance sheet. It is a cash machine. So for those of you who want to, what I think is an extremely safe stock in terms of, it’s moves up and down.

[00:03:38] Doug McIntyre: If you want something you can hold on to for a while. forever. You get a really good yield. This is it. It’s Altria.

[00:03:47] Lee Jackson: And, in addition, they have these no burn cigarettes as well, which I think you kind of smoke like that, but the tobacco doesn’t burn. That has another way to facilitate it.

[00:03:57] Lee Jackson: Speaking from experience, I haven’t smoked in years, but you know, it’s not an easy habit to kick, you know, the nicotine habit and they know that. But I mean, it is what it is. People smoke cigars and pipes and a lot of other stuff, so that’s just not an issue.