Dividend Powerhouse Altria Group (MO) Lures Value Investors With 7% Yield
May 30, 2025
If you’re seeking a dependable dividend stock with a generous yield, Altria Group (MO)—the U.S. parent company of Marlboro—is hard to ignore. Offering a nearly 7% dividend yield and boasting over 50 years of uninterrupted dividend growth, Altria stands out as a true Dividend King.
I’m bullish on the stock thanks to its strong track record of shareholder returns, not just through consistent dividend hikes but also through substantial and regular share buybacks. To top it off, the stock currently trades at an attractive valuation. Let’s take a deeper dive into why Altria may deserve a spot in your income portfolio.
Altria’s most compelling feature is its impressive 6.76% dividend yield—a figure that not only far exceeds the S&P 500’s average yield of 1.3%, but also comfortably surpasses the 4.5% yield on the 10-year Treasury. That positions Altria as one of the few S&P 500 stocks offering such a significant income advantage.
Beyond the headline yield, Altria offers remarkable consistency. As a Dividend King, the company has increased its dividend for 56 consecutive years, a streak that shows no sign of ending. Management understands that the company’s shareholder base is primarily income-focused, and as such, continued dividend growth remains a central priority.
While Altria’s dividend payout ratio sits slightly above 75%—a level that might raise concerns for some—this is largely by design. Given the mature nature of its core tobacco business, the company has minimal reinvestment needs, allowing it to allocate a substantial portion of earnings toward shareholder returns.
In addition to dividends, Altria has aggressively pursued share buybacks. Between 2020 and 2024, it repurchased $7.9 billion in stock, including a massive $3.4 billion in 2024 alone. In Q1 2025, Altria bought back another $326 million, with $674 million remaining under its current repurchase authorization, which it aims to complete by year-end.
These buybacks not only reduce the share count—boosting earnings per share and concentrating shareholder value—but also signal management’s confidence in the company’s valuation. When a company returns capital this consistently, it’s a clear testament to its commitment to shareholder value. Between dividends and buybacks, Altria returned nearly $40 billion to shareholders from 2020 through 2024—an impressive show of income strength and capital discipline.
In addition to its generous shareholder returns, Altria also stands out for its attractive valuation. The stock trades at just 11x projected 2025 earnings—a steep discount compared to the S&P 500’s forward P/E of 21.1. While it’s reasonable for a mature tobacco company to trade at a lower multiple than the broader market, Altria’s valuation still appears notably inexpensive by any standard.
Yes, cigarette consumption continues to decline, and the prevailing narrative is that companies like Altria are in long-term structural decline. However, that view may be overly simplistic. While Altria isn’t a growth stock, it’s also not a “melting ice cube.” For fiscal 2025, the company is guiding for earnings per share growth of 2% to 5%, a modest but steady increase, exactly the kind of reliable performance investors expect from a high-yield, income-focused name.
Altria also has potential growth catalysts within its product portfolio, particularly with its on! nicotine pouches. In the most recent quarter, shipment volume for on! rose 18% year-over-year, reaching 39 million cans. Additionally, the product’s market share within the U.S. oral tobacco category grew to 8.8% in Q1 FY2025, up from 7.0% a year earlier—an encouraging sign of traction in the smokeless segment.
It’s also worth noting that Altria trades at a significant discount to its closest peer, Philip Morris International (PM), which commands a forward P/E of nearly 24, more than double Altria’s. Much of Philip Morris’ premium valuation is tied to the explosive growth of its Zyn nicotine pouches, which saw a 53% year-over-year increase in shipments in Q1 2025. According to Nielsen data, Zyn now holds over 60% of the U.S. oral nicotine market.
While on! isn’t nearly as dominant as Zyn, the valuation gap between Altria and Philip Morris leaves plenty of room for upside if Altria can continue expanding its presence in the smokeless category. It may not warrant the same multiple, but continued progress could help narrow the disparity over time.
MO earns a Hold consensus rating based on three Buys, three Holds, and two Sell ratings assigned in the past three months. The average analyst MO stock price target of $56.86 implies 4.4% downside potential from current levels.
Altria remains one of the most dependable dividend stocks in the market, boasting 56 consecutive years of dividend increases—and showing no signs of slowing down. I’m bullish on this $100 billion company due to its exceptional track record of shareholder returns, nearly 7% dividend yield, consistent share repurchases, and deeply discounted valuation.
While the stock trades at a low multiple, reflecting its status as a mature business, Altria is far from a declining asset. Management expects earnings per share to grow by 2–5% in 2025, which is steady performance for a company in this space. Meanwhile, growth products like on! nicotine pouches offer additional upside potential and a pathway to long-term relevance in a shifting nicotine landscape.
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