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Worth hikes have helped Altria Group defy quantity declines in cigarettes.
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Its share repurchase technique is essential to dividend progress.
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Traders must regulate vaping and nicotine pouches to see if they assist the corporate develop over the long-term.
Tobacco shares had been as soon as ignored. Now, they’re making a outstanding comeback. Altria Group (NYSE: MO) has posted a 30% complete return for shareholders to date in 2025 and is definitely beating the market during the last 5 years.
Traders are recognizing the secure money flows and excessive dividend yield of this tobacco and nicotine large, which just lately yielded near 10% however now nonetheless has a tidy 6.25% annual payout to shareholders, considerably higher than the market common.
Whereas some buyers fear about falling volumes for cigarettes in america, Altria Group has defied these headwinds and posted constant dividend progress for shareholders. Does that make the inventory a purchase right this moment?
Cigarette consumption in america has been falling for many years and just lately worsened within the age of nicotine pouches and digital vaping gadgets. This has been a serious headwind for tobacco firms, with volumes for Altria’s flagship Marlboro model slipping 10% yr over yr final quarter.
Regardless of this, Altria’s smokeable merchandise section grew its working earnings 4.4% yr over yr to $2.9 billion. How? Worth will increase, together with quantity progress for the cigars section.
The corporate constantly raises the value of its cigarettes bought to retailers, which counteracts quantity declines and will increase revenue margins. These working earnings are the important thing driver of constant free money movement era. Though smoking is on the outs within the U.S., there’s loads of room for the corporate to lift costs within the face of those quantity declines to keep up money flows.
When shopping for a low-growth inventory reminiscent of Altria, buyers care about dividend revenue and dividend progress. In the present day, buyers who purchase it get a yield of 6.25%, which means each $10,000 within the inventory generates $625 in annual revenue. Not unhealthy.
Altria is optimizing its capital returns for rising its dividend per share over the lengthy haul. It’s utilizing money movement not going to dividends to repurchase inventory, which has introduced its shares excellent down by 14% within the final 5 years.
Not too long ago, the tempo of share repurchases has accelerated, which ought to additional assist to extend the dividend per share. With fewer shares excellent, Altria will have the ability to keep a nominal dividend payout whereas rising the per-share paid out to remaining shareholders.
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Worth hikes have helped Altria Group defy quantity declines in cigarettes.
-
Its share repurchase technique is essential to dividend progress.
-
Traders must regulate vaping and nicotine pouches to see if they assist the corporate develop over the long-term.
Tobacco shares had been as soon as ignored. Now, they’re making a outstanding comeback. Altria Group (NYSE: MO) has posted a 30% complete return for shareholders to date in 2025 and is definitely beating the market during the last 5 years.
Traders are recognizing the secure money flows and excessive dividend yield of this tobacco and nicotine large, which just lately yielded near 10% however now nonetheless has a tidy 6.25% annual payout to shareholders, considerably higher than the market common.
Whereas some buyers fear about falling volumes for cigarettes in america, Altria Group has defied these headwinds and posted constant dividend progress for shareholders. Does that make the inventory a purchase right this moment?
Cigarette consumption in america has been falling for many years and just lately worsened within the age of nicotine pouches and digital vaping gadgets. This has been a serious headwind for tobacco firms, with volumes for Altria’s flagship Marlboro model slipping 10% yr over yr final quarter.
Regardless of this, Altria’s smokeable merchandise section grew its working earnings 4.4% yr over yr to $2.9 billion. How? Worth will increase, together with quantity progress for the cigars section.
The corporate constantly raises the value of its cigarettes bought to retailers, which counteracts quantity declines and will increase revenue margins. These working earnings are the important thing driver of constant free money movement era. Though smoking is on the outs within the U.S., there’s loads of room for the corporate to lift costs within the face of those quantity declines to keep up money flows.
When shopping for a low-growth inventory reminiscent of Altria, buyers care about dividend revenue and dividend progress. In the present day, buyers who purchase it get a yield of 6.25%, which means each $10,000 within the inventory generates $625 in annual revenue. Not unhealthy.
Altria is optimizing its capital returns for rising its dividend per share over the lengthy haul. It’s utilizing money movement not going to dividends to repurchase inventory, which has introduced its shares excellent down by 14% within the final 5 years.
Not too long ago, the tempo of share repurchases has accelerated, which ought to additional assist to extend the dividend per share. With fewer shares excellent, Altria will have the ability to keep a nominal dividend payout whereas rising the per-share paid out to remaining shareholders.
