Who needs Altria Group Inc. (NYSE: MO | MO Price Prediction) when you can own Nvidia Corp. (NASDAQ: NVDA)? Altria has a yield of 7.2%, a rock-solid balance sheet, and customers who won’t go away. Nvidia only rules the hottest sector of the stock market and has for some time.
When there was worry about the AI tech bubble a month or two ago, Altria’s stock was up 30% for the year. Today, it has slightly underperformed the S&P 500 for the year. Its stock is up 13%, and S&P 500 is up 14%. Meanwhile, Nvidia has seen a 40% gain. However, it has also taken the stock market climb of the century. In the past five years, Nvidia is up almost 1,400%. The market is up over 86% during the same time.
When the Bubble Bursts
Altria only sells cigarettes and smokeless tobacco. Those won’t be boom businesses. While it is steady, it won’t be a boom stock, and that is forever. It won’t be popular until the AI bubble bursts. Then, it might look like a pretty good investment.
Among the stocks that pay large dividends, Altria is also the safest, based on its long-term performance. Its 7.2% yield is based on a forward dividend of $4.24. Over the past 56 years, it has raised its dividend 60 times. The median age of Americans is 39 years.
In terms of decades-long high yields, the two most often mentioned in the same breath as Altria are Dow Inc. (NYSE: DOW) and Pfizer Inc. (NYSE: PFE). Pfizer’s stock is down 6% this year. Dow’s is down 47% this year, and it recently cut its dividend.
In total, Altria has paid out $32 billion in dividends over the fiscal years 2020 to 2024. It has also purchased $8 billion of its shares during the same period.
In the most recently reported quarter, Altria’s revenue fell 3% to $6.1 billion. However, its adjusted diluted earnings per share (EPS) were up 5% to $1.41. It increased its EPS guidance for the year slightly. Its success in the most recent quarter came from its legacy business. Billy Gifford, Altria’s chief executive officer, commented, “Altria continued to build significant momentum in the third quarter with exciting progress across our businesses.”
Almost all of Altria’s revenue comes from sales of cigarettes, and many investors are hesitant to buy its stock for this reason. However, the dividend is a significant incentive to offset that concern.
Other Reasons to Invest
Another reason to consider investing in Altria is the potential risk to the global economy. People typically do not cut back on cigarette smoking in tough economic times. Altria’s dividend is unlikely to disappear, as the company’s balance sheet is excellent.
Finally, the threat of tariffs continues to linger. An increase in tariffs and the effects on inflation mean American consumers’ buying power will be hit. That, in turn, threatens U.S. gross domestic product (GDP). Under those circumstances, Altria may be the best stock to own if that is what the future holds. That is, if investors can ignore its tobacco business.
Altria Stock Price Prediction and Forecast 2025-2030
Top Gaining Stocks
Top Losing Stocks