Of the stocks that pay large dividends, the safest is probably the tobacco company Altria (NYSE: MO).
Altria offers strong profitability and a high, growing dividend yield but struggles with stagnant sales and a weak balance sheet. Valuation remains moderate, and the company boasts a 55-year dividend payment streak, appealing to income-focused investors. Growth initiatives in smoke-free products and potential cannabis reform present upside, yet progress is slow and faces regulatory headwinds.
MO's on! shipments jumped 26.5% in the second quarter, lifting its U.S. pouch share as marketing and earnings momentum intensify in a fast-growing market.
According to the Internal Revenue Service (IRS), passive income generally includes earnings from rental activity or any trade, business, or investment in which the individual does not materially participate.
Altria remains a compelling buy due to undervaluation based on updated dividend discount models, with fair value estimates significantly above the current price. The company's strong dividend history, recent dividend increase, and robust dividend growth potential reinforce its appeal for income-focused investors. Growth in oral tobacco products, successful NJOY product adaptation, and positive FDA enforcement actions support Altria's future earnings outlook.
Altria Group, Inc. has surged over 14% since my last coverage, and with this is no longer the laggard of the tobacco pack. The company's Q2 2025 results and its recent dividend increase work in MO stock's favor. Better than expected earnings, reduced contraction in revenues, success for its on! nicotine pouches and improved earnings outlook pleased MO investors.
MO's smokeable margins jumped 2.9 percentage points to 64.5% as pricing power and cost cuts offset sharp volume declines.
Altria's revenue growth has deteriorated in recent years, warranting investigation into dividend sustainability. Combustibles volume contraction in the US has been severe, and Altria has been losing share. Nevertheless, Altria remains a free cash flow machine and appears to have significant headroom to safeguard the dividend and its growth for many years to come.
Key Points in This Article: Dividend stocks like Altria (MO) offer passive income and compounding returns, ideal for long-term wealth creation.
MO and PM battle for investor favor as smoke-free gains, pricing power and earnings growth reshape their outlooks.
MO uses pricing strength to cushion profits against steep drops in cigarette volumes.
MO hits a 52-week high on earnings growth, oral tobacco gains and rising investor confidence in its long-term strategy.