Altria Boosts Dividend by 7.3%


The tobacco manufacturer, Altria Group Inc. (MO) recently hiked its dividend by 7.3% to 44 cents per share. The dividend increase from 41 cents per share is in tune with Altria’s dividend payout ratio target of around 80% of its adjusted earnings per share.

The quarterly dividend will be paid on October 10, 2012, to shareholders of record as on September 14, 2012. The new annualized dividend rate is $1.76 per common share, up 7.31% compared with $1.64 per common share.

The company has already increased its dividend 46 times in the last 43 years. The last dividend hike was in August 2011, when the company had hiked its quarterly dividend by 7.9% to 41 cents per share from 38 cents per share.

Besides hiking dividend, the company also repurchases shares to enhance shareholders value. It spent $66 million in the second quarter to buy back 2 million at an average cost of $32.37 per share.

The company recently delivered second quarter 2012 earnings of 59 cents, which  beat the Zacks Consensus Estimate by 2 cents as well as the prior-year quarter results by 9.3%.

Following the better-than-expected second quarter results, the company raised its 2012 earnings guidance from a range of $2.17 to $2.23 to a range of $2.19 to $2.23, representing a growth rate of 7% to 9% over $2.05 per share in 2011. The Zacks Consensus Estimate is pegged at $2.21 per share for full year 2012.

The company expects adjusted diluted earnings per share to be up modestly in the second half of 2012.

Following the announcement, the share prices of the company increased upwards. It is likely that continuous efforts on the part of the company to boost shareholders' value, reinstated investor confidence and hence helped the share price move upwards. The share price of Altria ascended 1.9% to close at $34.08 as on Friday.

Headquartered in Richmond, Virginia, Altria engages in the manufacture and sale of cigarettes, smokeless products, and wine in the United States and internationally. It competes with Reynolds American Inc. (RAI) and Lorillard Inc. (LO).

Currently, the company holds a Zacks #3 Rank (short term Hold rating) with a long-term Neutral recommendation.

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