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Alberto Abaterusso
Alberto Abaterusso
Articles (1177) 

Altria Group Declares Quarterly Dividend

Altria will pay the quarterly dividend to its shareholders on January 10

December 07, 2017 | About:

The board of directors of Altria Group (NYSE:MO) authorized a quarterly dividend for the last three months of fiscal 2017 as announced by the U.S. tobacco giant Wednesday.

The tobacco giant headquartered in Richmond, Virginia, will distribute a cash dividend of 66 cents per ordinary share of Altria Group to shareholders of record Dec. 21. The ex-dividend is scheduled for Dec. 20.

The dividend will be paid by Altria to its shareholders on Jan. 10. This quarterly distribution of Altria’s free cash flow is on par with the previous one and represents an 8.2% increase from the dividend the tobacco giant paid to its shareholders for the first quarter of fiscal 2017.

If the company holds this quarterly distribution constant for the following three quarters, it will lead to a forward annual dividend of $2.64 per ordinary share, for a forward yield of 3.85% according to Altria Group’s share price at yesterday’s close. This compares to the S&P 500 dividend yield of 1.83%.

Altria Group is currently paying part of its levered free cash flow out to holders of the company according to a 31% rate of total net sales versus an industry median of 66%.

Operating in an industry – tobacco – which will never know a crisis makes Altria Group a loyal payer of a regular dividends as it experiences steadily increased sales over time.

Chart 1. Altria Group’s sales over the last five fiscal years:

Chart 2. Altria Group’s sales over the last five quarters:

The positive trend in Altria Group’s sales can also be easily picked over the last three quarters (or the first three quarters of fiscal 2017) that should lead – according to consensus – to an annual revenue of $19.61 billion.

If the U.S. tobacco giant will either meet or top expectations on full fiscal 2017 sales, this will be at least a 1.40% rise from previous year’s sales.

Funds of approximately $4.34 billion for annual free cash flow – calculated as an average over the last five fiscal years – is used by Altria Group to pay dividends and for business growth purposes. The U.S. tobacco giant’s portfolio also includes activities in the smokeless products industry and in wineries.

GuruFocus assigns Altria Group a financial strength rating of 6 out of a total of 10 and a profitability & growth rating of 8 out of 10.

Altria has an average target price of $71.46 and a recommendation rating of 2.1 out of 5.

Altria Group is currently trading at $71.66 per share on the New York Stock Exchange, with a market capitalization of $136.74 billion, a price-book (P/B) ratio of 11.23 versus an industry average of 3.37, a price-earnings (P/E) ratio of 8.98 versus an industry median of 18.26 and with a price-sales (P/S) ratio of 7.08 versus an industry median of 3.13.

The Forward PE ratio is 20.02 times.

The last chart illustrates how Altria Group is trading with reference to the Peter Lynch earnings line:

Even though Altria Group is trading above the P/E without NRI line which shows that the tobacco stock may be a bit overvalued at the moment – increasing a holding of this stock, as for any other publicly traded tobacco giant stock, makes always sense for the income investor.

Besides the share price, Altria Group’s current market capitalization is also a result of a total volume of 1.91 billion shares outstanding. Of the latter, a hefty percentage of 64.91% is held by institutions.

Among the top institutional holders, the Vanguard Group Inc. and Blackrock Inc. are prominent holders with 137,351,779 shares (or 7.20%) and 134,264,023 shares (or 7.04%) held, which, as of Sept. 29, 2017, are valued at $8,846,828,588 and $8,647,946,213, respectively.

Disclosure: I have no positions in Altria Group.

About the author:

Alberto Abaterusso
If somebody asks what being a Value Investor means, Alberto Abaterusso would answer: “the Value Investor is not the possessor of a security that represents the company, but he is the owner of that company. As an owner of the company the Value Investor is actively involved in the dynamics of that company and his first aim is how to have sales progressively growing.”

Alberto Abaterusso would add: “probably the Value Investor is one of the least patient persons in the world concerning sales.”

Alberto Abaterusso is a freelance writer based in The Netherlands. He primarily writes about gold, silver and precious metals mining stocks. His articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. Alberto holds an MBA from Università degli Studi di Bari (Italy), Aldo Moro.

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