Latest news with #AltriaGroup
Globe and Mail
12 hours ago
- Business
- Globe and Mail
This Ultra-High Dividend Yield Stock Is Crushing the Market in 2025: But Is It a Buy Today?
In times of turmoil and uncertainty, investors often flock to consumer staples. That has occurred yet again in 2025. Altria Group (NYSE: MO) has posted a total return of 17% year to date, compared to a measly 2% return for the S&P 500 index. With domestic rights to the tobacco brand Marlboro, among other assets, the company has long been a reliable dividend stock, and it boasts a sky-high dividend yield of 6.8% as of this writing. Should you buy shares of Altria Group to ride out market volatility? Here are the positives and negatives of owning the tobacco stock right now. Declining cigarette volumes The largest selling point against Altria Group and its cigarette business is the rapidly declining usage of cigarettes in the United States. While good for society, it is a headwind to Altria's bottom line, with gradually declining demand for the company's core product. And this trend may be accelerating as Marlboro volumes fell 13% year over year last quarter, one of the worst volume performances in the company's history. Altria has been able to counteract volume declines with price increases. Smokeable net revenue after excise taxes only dipped 4.1% last quarter with operating income up 1.2% to $2.47 billion. Altria has long been able to prop up its bottom line despite the shrinking pool of smokers in the United States. It reported $11.62 billion of consolidated operating income over the past 12 months, a figure that has held relatively steady over the last five years. Trying to move beyond cigarettes Just because cigarette usage in the U.S. is declining, however, does not mean nicotine usage is down. New forms of nicotine consumption have popped up in recent years, such as electronic vapor and tobacco-free nicotine pouches. Altria has made numerous investments into these product categories. It now owns the NJOY vaping brand, which is growing market share in the U.S. (6.6% as of last quarter). Revenue and earnings from NJOY are not disclosed today, but it is a growing brand for Altria that can help make up for lost cigarette customers. Altria also owns the On! pouch brand, which grew shipment volumes 18% last quarter to 39.3 million. One problem remains, though: It's well behind other tobacco giants in building these new nicotine businesses. For example, On! competitor Zyn, owned by Philip Morris International, is growing faster and has much larger market share. Zyn shipment volume in the United States was 202 million last quarter, up from 132 million a year ago. That means Zyn added more than the entire quarterly On! shipment volume in just one year. Altria is behind its peers in non-tobacco nicotine, and that's not a great place for the business to be in. Data by YCharts. Should you buy Altria Group stock at a dividend yield of 6.8%? Altria's dividend currently yields 6.8%, enough to generate a substantial amount of annual income. For example, if you own $10,000 of Altria stock, you would receive about $680 in dividend income for the year (before taxes). That amount will likely grow over time as well. But how sustainable is this dividend with the company facing weakening demand for its biggest product? Altria pays an annualized dividend per share of $4.04, while its free cash flow per share is $4.97, or 23% larger than the payout. Free cash flow is the core metric here since it represents the company's operating cash flow, less capital expenditures (money reinvested into the business). The cushion between Altria's dividend payments and free cash flow leaves it with some flexibility to maintain and grow its annual payout. At the same time, management is repurchasing stock, which reduces its outstanding share count and the total amount paid out in dividends each quarter. So, in the short run, Altria Group should have no trouble maintaining its dividend, but it's the long run that concerns me. Record cigarette volume declines will catch up with the company eventually, and anyone looking to hold the stock for years of steady, passive income is facing this major risk. That's why I suggest avoiding Altria Group stock, even with its market-beating yield. Should you invest $1,000 in Altria Group right now? Before you buy stock in Altria Group, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Altria Group wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $664,089!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $881,731!* Now, it's worth noting Stock Advisor 's total average return is994% — a market-crushing outperformance compared to172%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 9, 2025
Yahoo
a day ago
- Business
- Yahoo
Should You Buy Altria Group Stock Under $60 With a Dividend Yielding 6.85%?
Shares of Altria Group have been soaring because of market uncertainty. The company is trying to diversify away from cigarettes with little success so far. It has a highly levered balance sheet, which will impact its ability to pay a dividend. 10 stocks we like better than Altria Group › The resurgence of tobacco stocks has been an underdiscussed theme in 2025. While the world is worried about foreign conflicts, tariffs, and the Federal Reserve, stocks like Altria Group (NYSE: MO) have sneakily crushed the market. Shares are up close to 17% this year and are approaching $60, a level Altria hasn't hit since 2017. In times of uncertainty, investors flock to safe-haven stocks, such as tobacco, which typically perform consistently through all economic environments. Altria Group still has a dividend yielding 6.85% right now, making it one of the highest dividend payers investors can buy today. But does that mean you should buy the stock? The answer may not be so simple. Here's why. Altria is the owner of the Marlboro cigarette brand in the United States, focused solely on selling in the United States domestic market. As many readers are aware, cigarette usage in the United States has declined dramatically in recent decades, which has put stress on Altria's operations. These declines are only expected to continue, as young adult usage has quickly dropped in recent years, which will put further pressure on product volumes. To diversify away from cigarettes, Altria has made major investments and acquisitions into other vice products. These include areas like cannabis, nicotine pouches, cigars, electronic vaping, and alcohol. So far, it has seen muted success in these new sectors and some major failures. Most notable was the company's huge $12.8 billion investment in Juul, which was eventually written down to zero. It currently has a sizable stake in Anheuser Busch, but that has been a long-term holding for the company. Overall, if we look at Altria's business, it is still mainly driven by the smokeables segment, the majority of which is driven by cigarette consumption. Last quarter, 88% of Altria's net revenue came from smokables. Its new vaping and nicotine pouch initiatives are still a tiny part of the overall company. Cigarette usage in the United States is declining rapidly and looks to be accelerating as consumers shift their nicotine consumption to tobacco-free categories like nicotine pouches. Last quarter, Marlboro volumes declined 13.3% year over year. Historically, cigarette usage declined at under 5% a year, making recent years a huge shift in the industry. This presents a large risk for Altria Group and its cash cows. Management has been able to keep profits steady by rapidly increasing prices on packs of Marlboro cigarettes and trimming overhead costs, but this is not something that it can do indefinitely. The majority of Altria's $11.6 billion in annual operating earnings comes from cigarettes, which fuels its dividend growth. If these profits start declining and are not replaced by new nicotine use, Altria is at risk of halting its dividend growth or slashing its annual payment. This would be bad news for shareholders. I am not talking about this happening next year but within the next decade. Eventually, there will be too few smokers in the United States for price hikes to counteract volume declines to maintain profitability. We are already seeing this impact on revenue. Altria's revenue peaked in 2021 and has been slowly declining ever since. Altria Group talks a big game about investing outside of cigarettes -- and has done so for over a decade (the Juul investment was in 2017). Yet, as we sit here today, close to 90% of its business still comes from combustible tobacco products. Management has aggressively repurchased its own stock in recent years. Shares outstanding are down around 10% in the last five years. In a vacuum, this is not a bad thing, as a lower level of shares outstanding can allow a dividend payer like Altria to increase its dividend per share. In this case, it is being done so by taking on more debt and kicking the can down the road when it comes to diversifying its operations. Altra Group has $26 billion in debt on its balance sheet, a number that has grown to fuel stock repurchases while the cigarette business continues to deteriorate. It hasn't caused Altria Group to cut its dividend yet and may not do so for a few years, but if the company follows this path, it will eventually lead to a bad outcome. A highly leveraged balance sheet, huge volume declines, and zero success in diversification away from cigarettes is a bad combination for Altria Group. Investors would be smart not to buy this stock under $60 even with an attractive-looking dividend yield today. Before you buy stock in Altria Group, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Altria Group wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $664,089!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $881,731!* Now, it's worth noting Stock Advisor's total average return is 994% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 9, 2025 Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Should You Buy Altria Group Stock Under $60 With a Dividend Yielding 6.85%? was originally published by The Motley Fool
Yahoo
4 days ago
- Business
- Yahoo
Altria Trades at a Bargain: Is it a Good Time to Buy the Stock?
Altria Group, Inc. MO is currently trading at an attractive discount compared to its industry peers and the broader market, making it a potential value pick for long-term investors. MO stock trades at a forward 12-month price-to-earnings (P/E) ratio of 10.81, notably lower than the industry average of 15.73 and the S&P 500's average of 21.85. Backing this valuation, the stock holds a Zacks Value Score of B, underscoring its strong fundamentals and appealing valuation profile. Image Source: Zacks Investment Research When compared to leading competitors, Altria's relative undervaluation stands out even more. Philip Morris International Inc. PM and Turning Point Brands TPB trade at significantly higher forward P/E ratios of 21.18 and 21.07, respectively. Meanwhile, British American Tobacco p.l.c. BTI trades at a slightly lower P/E of 10.49, still comparable to Altria. Despite favorable valuations, MO's recent stock performance suggests a possible entry point. The stock has gained 1.8% over the past three months, underperforming the industry average growth of 17.1%, the S&P 500's 5.4% return, and competitors like Philip Morris (+19%), Turning Point Brands (+30.8%), and British American Tobacco (+18.5%). Image Source: Zacks Investment Research As of June 17, 2025, Altria stock closed at $58.99, approximately 3.7% below its 52-week high of $61.26 (hit on May 7, 2025). Importantly, MO is trading above both its 50-day and 200-day moving averages, signaling underlying bullish momentum and investor confidence. Image Source: Zacks Investment Research With a combination of undervaluation, solid fundamentals, and potential technical upside, Altria may offer a compelling opportunity for value-focused investors looking to capitalize on the evolving tobacco landscape. Altria is accelerating its shift toward a smoke-free future, with its oral nicotine pouch brand on! emerging as a key growth engine. In the first quarter of 2025, on! shipments surged 18% year over year, surpassing 39 million cans. The brand gained 1.8 share points in the oral tobacco category, reaching 8.8%, while also increasing its nicotine pouch market share to 17.9%. These gains came despite higher retail pricing and optimized promotional spending, underscoring on!'s strong brand equity and consumer loyalty. This momentum reflects Altria's successful efforts to align its product portfolio with evolving consumer demand for reduced-risk products (RRPs). Similar to Altria, major tobacco companies such as Philip Morris, British American Tobacco and Turning Point Brands are also accelerating their transition toward smoke-free pricing power remains a critical pillar of Altria's growth strategy. The company continues to leverage strategic price increases to offset soft volumes in traditional cigarette segments and navigate a challenging regulatory landscape. In the first quarter, higher pricing supported revenue growth across both the Smokeable Products and Oral Tobacco segments. The company's ability to sustain profitability — even amid cigarette volume declines — demonstrates its pricing resilience. Altria projects 2025 adjusted earnings per share (EPS) between $5.30 and $5.45, reflecting up to 5% year-over-year growth from a base of $5.19 in 2024 (excluding intangible asset amortization), reinforcing the strength of its operating drive long-term value creation, Altria has introduced its 'Optimize & Accelerate' initiative, a forward-looking program designed to improve speed, agility and cost efficiency. The initiative enables the company to reinvest in innovation and support its smoke-free transformation. In addition, Altria is actively retooling its e-vapor platform through NJOY, following recent regulatory setbacks. Altria remains committed to offering science-based, regulated vapor products that meet the evolving preferences of adult consumers. These strategic moves position Altria to lead the next generation of nicotine innovation. Reflecting positive sentiment around Altria, the Zacks Consensus Estimate for EPS has seen upward revisions. Over the past 30 days, the estimate for the current year has increased by 4 cents to $5.39, while the estimate for next year has risen by a cent to $5.55. These upward revisions signal improving sentiment among analysts. Based on current projections, MO is expected to deliver year-over-year EPS growth of 5.3% this year and 3% next year. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.) Image Source: Zacks Investment Research Given Altria's attractive valuation, solid earnings outlook, and strategic push toward smoke-free products, the stock appears well-positioned for value-focused investors seeking stable returns in a transforming industry. While regulatory headwinds and market competition persist, MO's strong pricing power, growing presence in reduced-risk products, and favorable analyst revisions suggest a compelling long-term opportunity in the tobacco space. At present, Altria carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Altria Group, Inc. (MO) : Free Stock Analysis Report Philip Morris International Inc. (PM) : Free Stock Analysis Report British American Tobacco p.l.c. (BTI) : Free Stock Analysis Report Turning Point Brands, Inc. (TPB) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
Yahoo
14-06-2025
- Business
- Yahoo
Altria Picked by UBS as Safe Haven Dividend Stock
Altria Group, Inc. (NYSE:MO) is one of the best stocks for a retirement stock portfolio. The stock was highlighted by UBS equity strategists as one of the companies that offer 'safe haven' qualities, marked by strong operational performance, low stock price volatility, and a substantial dividend. A close-up of an assembly line with a blend of tobacco products. The company offers a dividend yield close to 7% and has a beta of just 0.5, meaning its stock remains relatively stable during market turbulence while delivering a return that's about 60% higher than the yield on a 10-year Treasury bond. Trivariate Research also included Altria Group, Inc. (NYSE:MO) in one of its defensive stock baskets. The firm, led by Adam Parker, pointed out that Altria tends to perform well during market downturns, while also showing strong price momentum and trading at a valuation lower than its historical average. Over the past few years, Altria Group, Inc. (NYSE:MO) stock has gained considerable ground, partly due to growing interest in the smokeless tobacco market. The company produces On! nicotine pouches, and its shares rose 30% last year and another 15% this year, through June 12 (not including dividends), reaching their highest level in six years. While that rally may raise some concerns, the nearly 7% dividend offers investors a sense of stability and income. Altria Group, Inc. (NYSE:MO) has raised its dividends 59 times in the past 55 years, which makes it a reliable option for income investors. Altria Group, Inc. (NYSE:MO) maintains a broad portfolio spanning both the tobacco and cannabis sectors. By leveraging its fully owned subsidiaries and strategic investments, the company aims to offer leading product options for adult consumers while also focusing on delivering strong returns to shareholders through dividend payouts and long-term growth. While we acknowledge the potential of MO as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: and Disclosure. None. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
13-06-2025
- Business
- Yahoo
Altria Group Stock Gets Relative Strength Rating Lift
A Relative Strength Rating upgrade for Altria Group shows improving technical performance. Will it continue?
