Since 1926, dividends have contributed approximately 32% of the total return for the S&P 500, while capital appreciations have contributed 68%.
Altria (MO 0.10%) has a huge 7.1% dividend yield. British American Tobacco (BTI 0.61%) has an even higher yield of roughly 8%.
The power of owning dividend-paying stocks is often underappreciated. Consider, for example, that a study by Hartford Funds and Ned Davis Research found that between 1973 and 2023, companies that grew or initiated dividend payments delivered annualized returns of 10.2%, while dividend non-payers delivered only 4.3% (and an equal-weight S&P 500 fund averaged 7.7%).
Despite its social stigma and terrible health consequences, tobacco is arguably the most lucrative business the world has ever seen. The U.S. Surgeon General first warned the American public about the dangers of smoking on Jan. 11, 1964.
Altria, with a $90 billion market cap and more than 7% dividend yield, remains a valuable long-term investment due to its strong earnings. The company faces a significant regulatory burden and declining industry volumes, posing challenges to its growth. Despite these challenges, Altria continues to achieve robust earnings growth and offers substantial shareholder returns.
There are a lot of things to like about Altria (MO 1.25%), particularly if you are a dividend investor. But there are also a few very important things to be worried about.
The stock price of Altria (NYSE: MO) has risen around 15% in a month, primarily due to a better than anticipated quarterly performance driven by growth in its oral tobacco products. Looking at a slightly longer period, Altria has seen its stock rise nearly 50% from levels of $38 in early 2022 to $56 now.
Market volatility post-election and Fed Chair Powell's remarks led to declines in major indices and specific stocks like Pfizer and Coca-Cola. Diversification in my Dividend Harvesting Portfolio mitigated losses, maintaining a 25.53% return on invested capital despite market retracements. Weekly dividend income is growing, with a projected annualized dividend income of $1,855.76, showcasing the power of reinvestment and compounding.
Zacks.com users have recently been watching Altria (MO) quite a bit. Thus, it is worth knowing the facts that could determine the stock's prospects.
I maintain a 'hold' rating for Altria Group due to its declining market share and the ongoing reduction in smoking rates. Despite attractive valuation and growth in segments like NJOY and on!, overall market share and cigarette volume continue to decline. Revenue growth is driven by higher pricing, but this isn't enough to offset the weaknesses in the company's core markets.
3 Reasons to Buy Altria Stock Like There's No Tomorrow
The recent surge across the markets, led by sectors like tech, energy, financials, and industrials, demonstrates that volatility surrounding election results can often drive attention away from more conservative, income-focused investments.