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Altria Group Inc's Dividend Analysis

Exploring the Sustainability and Growth of Altria Group Inc's Dividends

Altria Group Inc (NYSE:MO) recently announced a dividend of $0.98 per share, set to be paid on July 10, 2024, with shareholders needing to own the stock by June 14, 2024, to be eligible. As this date approaches, it's an opportune moment to delve into the dividend's reliability and growth, considering the company's historical performance and financial health.

Company Overview

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Altria Group Inc encompasses notable entities like Philip Morris USA and U.S. Smokeless Tobacco. It holds a significant 8% stake in Anheuser-Busch InBev, and a 42% share in cannabis producer Cronos. Altria is a dominant player in the U.S. tobacco market, with its Marlboro brand commanding a 42% market share in 2022. Recent strategic moves include acquiring Njoy Holdings in 2023 and exiting its investment in Juul Labs, alongside a joint venture in heated tobacco products with Japan Tobacco.

Altria Group Inc's Dividend Analysis
Altria Group Inc's Dividend Analysis

Altria Group Inc's Dividend Track Record

Altria Group Inc has been a model of consistency in dividend payments, having increased its dividend annually since 1970. This achievement earns it the prestigious title of a 'dividend king.' The company distributes dividends quarterly, a practice that has contributed to its reputation for reliability among investors.

Altria Group Inc's Dividend Analysis
Altria Group Inc's Dividend Analysis

Dividend Yield and Growth Insights

Currently, Altria Group Inc boasts a trailing dividend yield of 8.47% and a forward dividend yield of 8.56%, indicating expectations of continued dividend growth. Over the past decade, the annual growth rate of its dividends per share has been 8.10%, with a 4.70% increase over the past five years. Today, the 5-year yield on cost for Altria's stock is approximately 10.66%.

Altria Group Inc's Dividend Analysis
Altria Group Inc's Dividend Analysis

Assessing Dividend Sustainability

The dividend payout ratio, which currently stands at 0.79, is crucial for evaluating whether Altria can sustain its dividends. This ratio suggests that Altria is distributing a significant portion of its earnings as dividends. While this might raise concerns about sustainability, the company's profitability rank of 8 out of 10 indicates robust earnings potential, having reported net profit in 9 of the past 10 years.

Growth Metrics and Future Prospects

Altria's growth rank is also impressive at 8 out of 10, reflecting a strong competitive position. However, its revenue growth rate of 1.00% per year and 3-year EPS growth rate of 4.30% slightly lag behind many global competitors. These figures underscore the importance of cautious optimism when considering the long-term sustainability of Altria's dividends, given the mixed signals from its growth metrics.

Conclusion: Is Altria's Dividend Promising?

While Altria Group Inc showcases a strong dividend history and decent yield percentages, potential investors should weigh the high payout ratio and mixed growth indicators. These factors could impact the long-term sustainability of dividend payments. For those looking to explore further, GuruFocus Premium provides tools like the High Dividend Yield Screener to discover stocks with attractive dividend profiles.

This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.

This article first appeared on GuruFocus.