Want $1,000 in Dividend Income? Here's How Much You'd Have to Invest in Altria Stock

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Tobacco giant Altria Group (MO 0.68%) has been one of the more prominent dividend stocks over the last few decades. Despite hundreds of billions of dollars in legal settlements, its products’ addictive qualities have allowed it to offer generous payouts to draw investors to the stock.

Nonetheless, the popularity of its chief product — cigarettes — has been declining for decades, so investors should look closely at its entire business before attempting to profit from those payouts.

Altria’s dividend

Altria pays $3.92 per share in annual dividends. At its current price, that gives it a dividend yield of 8.75%, meaning investors would have to invest $11,430 to receive $1,000 per year.

That yield is nearly 7 times the S&P 500‘s average of 1.3%. Also, management has increased the payout annually since 2009, and the previous two “dividend cuts” involved spinoffs that netted investors more stock. Hence, it has served as an excellent source of income.

The growth is especially impressive considering that the surgeon general’s report on the dangers of smoking came out 60 years ago. Despite a long-term decline in smoking rates and heavy legal costs, Altria stock and its dividend have increased massively since then.

MO data by YCharts.

However, its revenue fell in 2023 and is on track to do so again in 2024. Altria’s failed investment in vaping company Juul and its steep losses on its cannabis investment in Cronos Group bode poorly for the company.

Altria has since invested $2.75 billion in vaping company NJOY. Still, if it fails to return to revenue growth, the dividend could ultimately be in danger.

Should you buy Altria for the dividend?

Despite its high yield, investors should think twice about buying Altria for the payout. Admittedly, both the tobacco stock and its dividend have beaten the odds and risen in past decades.

However, revenue is declining, and management has not established a clear path to get back to growth. Until growth resumes, investors should probably look elsewhere for dividends, even if it means one must invest more to achieve a $1,000 payout.

Will Healy has no position in any of the stocks mentioned. The Motley Fool recommends Cronos Group. The Motley Fool has a disclosure policy.