Is Altria (MO) a Good Dividend Stock?

Analyzing a company’s dividend profile is a common approach for investors seeking regular income streams. This involves evaluating financial stability and broader industry trends to understand a stock’s suitability for a dividend-focused portfolio.

Key Characteristics of Dividend Stocks

A strong dividend stock typically exhibits several key characteristics. Dividend yield, the annual dividend per share divided by the stock’s price, indicates the percentage return an investor receives in dividends. While attractive, exceptionally high yields might signal financial difficulties.

Dividend growth rate measures how quickly a company increases its dividend payments over time. Consistent increases demonstrate a company’s commitment to returning value to shareholders and confidence in its future earnings power. This rate is often examined over various periods to identify stable trends.

The dividend payout ratio, calculated as dividends per share divided by earnings per share (EPS), indicates the proportion of earnings distributed as dividends. A lower payout ratio suggests that a company retains more earnings for reinvestment or to build a buffer for future dividend payments. A ratio that is too high might signal that the dividend is unsustainable, especially if earnings decline. Dividend consistency, reflecting a long history of uninterrupted and growing payments, further signals financial discipline and a reliable income stream for investors.

Altria’s Dividend Profile

Altria Group (MO) has a notable dividend profile, characterized by a substantial yield and long payment history. The company recently increased its quarterly dividend by 3.9% to $1.06 per share, resulting in an annualized dividend of $4.24. This brings Altria’s forward dividend yield to approximately 6.3%.

Altria has consistently demonstrated a commitment to its dividend, marking this recent increase as its 60th dividend hike in the past 56 years. This impressive track record includes 17 consecutive years of dividend increases, showcasing a pattern of reliable returns to shareholders. The company’s long-term dividend growth has been around a 4.10% average over the past five years.

Altria’s dividend payout ratio has been around 78.29% to 79.68% recently, with a target of approximately 80% of adjusted earnings per share. While this ratio is on the higher side, it aligns with the company’s stated policy of distributing a significant portion of its earnings to shareholders. This high payout ratio suggests that a large share of earnings is directed towards dividends, which can reduce funds available for reinvestment or building cash reserves.

Underlying Financial Health

Altria’s ability to sustain its dividend payments stems from its financial health, particularly revenue generation and earnings performance. The company’s net revenues have declined in recent years, with 2024 annual revenue at $24.018 billion, a 1.9% decrease from 2023. However, Q2 2025 showed a reduced revenue contraction rate, with a 1.7% year-over-year decline compared to 5.8% in Q1 2025.

Earnings per share (EPS) provides insight into profitability. Altria reported adjusted EPS of $1.44 for Q2 2025, surpassing analyst expectations. The company provided full-year 2025 adjusted diluted EPS guidance ranging from $5.35 to $5.45, indicating an expected growth rate of 2% to 5% from its 2024 base of $5.12. This projected earnings growth is a positive indicator for dividend sustainability.

Altria carries significant debt, totaling approximately $24.72 billion as of June 2025. The company’s debt-to-equity ratio was negative at -7.59 as of June 2025. A negative debt-to-equity ratio indicates negative shareholder equity, meaning its total liabilities exceed its total assets. While a concern, Altria’s debt is well-covered by its operating cash flow, and its interest payments are comfortably covered by earnings before interest and taxes (EBIT).

Industry Environment for Altria

Altria operates predominantly in the U.S. tobacco and nicotine market, influencing its long-term prospects and dividend sustainability. The company’s core business segments include smokeable products, primarily cigarettes under the Marlboro brand, and oral tobacco products like Copenhagen and Skoal. Altria also holds interests in other ventures, such as an 8% stake in Anheuser-Busch InBev and a 41% stake in cannabis manufacturer Cronos Group, diversifying its portfolio.

Altria maintains a leading U.S. market position, with its Marlboro brand holding a 42% share of the cigarette market in 2024. It also holds a dominant position in the smokeless tobacco category. However, the industry faces an evolving regulatory landscape, marked by increasing excise taxes and tightening regulations.

Shifting consumer preferences are also shaping the industry. Cigarette volumes have seen a 6% annual decrease from 2019 to 2024 in the U.S. market. In response, Altria has focused on smoke-free products, particularly oral nicotine pouches like “on!,” which have shown double-digit year-over-year volume growth. The company acquired Njoy Holdings in 2023, further expanding its presence in the e-vapor market. These strategic shifts are important as the company navigates a changing consumer landscape.