Exploring the Sustainability of Altria Group Inc's Upcoming Dividend
Altria Group Inc (MO, Financial) recently announced a dividend of $0.98 per share, payable on 2024-04-30, with the ex-dividend date set for 2024-03-22. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Altria Group Inc's dividend performance and assess its sustainability.
What Does Altria Group Inc Do?
Altria Group Inc operates as a holding company, engaged primarily in the manufacture and sale of cigarettes and other tobacco products in the United States. It comprises Philip Morris USA, U.S. Smokeless Tobacco, John Middleton, Horizon Innovations, and Helix Innovations. It holds a 10% interest in Anheuser-Busch InBev, the world's largest brewer. Altria Group Inc also holds the leading position in cigarettes and smokeless tobacco in the United States and is the number-two spot in machine-made cigars. The company's Marlboro brand is the leading cigarette brand in the U.S. with a 42% annual share in 2022. Altria holds a 42% stake in cannabis manufacturer Cronos, has acquired Njoy Holdings in 2023, and recently exited its strategic investment in Juul Labs.
A Glimpse at Altria Group Inc's Dividend History
Altria Group Inc has maintained a consistent dividend payment record since 1970, distributing dividends on a quarterly basis. It has increased its dividend each year since then, earning the prestigious title of a dividend king, a distinction reserved for companies with at least 54 consecutive years of dividend increases. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Altria Group Inc's Dividend Yield and Growth
Altria Group Inc currently boasts a 12-month trailing dividend yield of 8.56% and a 12-month forward dividend yield of 8.73%, indicating an expectation of increased dividend payments over the next year. Over the past three years, Altria Group Inc's annual dividend growth rate was 4.10%, which rose to 4.70% over a five-year period. The past decade has seen an annual dividends per share growth rate of 8.10%. This consistent growth translates to a 5-year yield on cost for Altria Group Inc stock of approximately 10.77% as of today.
The Sustainability Question: Payout Ratio and Profitability
The dividend payout ratio is a critical metric for assessing dividend sustainability, reflecting the portion of earnings allocated to dividends. As of 2023-12-31, Altria Group Inc's dividend payout ratio stands at 0.78, which may raise concerns about the sustainability of its dividends. However, Altria Group Inc's profitability rank is a robust 8 out of 10, indicating good profitability relative to peers and consistent net profit in 9 out of the past 10 years.
Growth Metrics: The Future Outlook
For dividends to be sustainable, robust growth metrics are essential. Altria Group Inc's growth rank of 8 out of 10 suggests a positive growth trajectory. However, its revenue per share and 3-year revenue growth rate indicate a performance that underperforms approximately 84.09% of global competitors. Similarly, Altria Group Inc's 3-year EPS growth rate and 5-year EBITDA growth rate also underperform compared to many global competitors.
Next Steps
Considering Altria Group Inc's consistent dividend growth, its current payout ratio, and profitability rank, value investors may find the stock an attractive option for dividend income. However, the underperformance in revenue and earnings growth rates suggests a need for cautious optimism and a close watch on future financial statements and market conditions. Will Altria Group Inc continue to reward shareholders with growing dividends, or will growth challenges necessitate a reassessment of dividend policies? As investors ponder these questions, they can leverage tools like the High Dividend Yield Screener available to GuruFocus Premium users to identify other high-dividend-yield investment opportunities.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
