Altria Group Inc (NYSE:MO) Is A Real Dividend Rock Star – Here Is Why
Over the past 10 years Altria Group Inc (NYSE:MO) has grown its dividend payouts from $1.16 to $2.8. With a market cap of US$106.68B, Altria Group pays out 46.97% of its earnings, leading to a 4.94% yield. Let me elaborate on you why the stock stands out for income investors like myself. View our latest analysis for Altria Group
What Is A Dividend Rock Star?
It is a stock that pays a stable and consistent dividend, having done so reliably for the past decade with the expectation of this continuing into the future. More specifically: Its annual yield is among the top 25% of dividend payers It has paid dividend every year without dramatically reducing payout in the past Its dividend per share amount has increased over the past It can afford to pay the current rate of dividends from its earnings It is able to continue to payout at the current rate in the future
High Yield And Dependable
The company’s dividend yield stands at 4.94%, which is on the low-side for Tobacco stocks. But the real reason Altria Group stands out is because it has a high chance of being able to continue to pay dividend at this level for years to come, something that is quite desirable if you are looking to create a portfolio that generates a steady stream of income.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. MO has increased its DPS from $1.16 to $2.8 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. This is an impressive feat, which makes MO a true dividend rockstar. The company currently pays out 46.97% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a higher payout ratio of 76.21%, leading to a dividend yield of 5.75%. However, EPS is forecasted to fall to $3.97 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
Next Steps:
There aren’t many other stocks out there with the same track record as Altria Group, so I would certainly recommend further examining the stock if its dividend characteristics appeal to you. However, given this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I’ve compiled three key aspects you should look at:
Future Outlook: What are well-informed industry analysts predicting for MO’s future growth? Take a look at our free research report of analyst consensus for MO’s outlook.
Valuation: What is MO worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether MO is currently mispriced by the market.
Other Dividend Rockstars: Are there strong dividend payers with better fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
