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Altria Group Inc. (NYSE:MO), the U.S. manufacturer behind the iconic Marlboro cigarettes, announced a 4.1% increase in its quarterly dividend to $1.02 per share on Thursday. This marks the 55th consecutive year that the company has raised its dividend, further cementing its reputation as a reliable income generator for shareholders.
Dividend Increase Amidst Strong Yields
Following the announcement, Altria’s stock remained relatively unchanged, closing at $51.83 after briefly touching a new 52-week high of $51.94. The company now offers a dividend yield of 7.9%, making it one of the highest-yielding stocks in the S&P 500 index. This impressive yield underscores Altria’s commitment to returning capital to its shareholders, a strategy the company has long prioritized.
Historical Dividend Growth and Future Targets
Altria has a well-established history of rewarding its shareholders, consistently paying out around 80% of its earnings in the form of dividends. Last year, the company set a target to grow its dividend at a mid-single-digit annual rate through 2028. Since 2018, the dividend has risen at an approximate 4% annual rate, in line with its stated goals.
The latest dividend increase reflects approximately 80% of Altria’s projected earnings per share of $5.10 for 2024, indicating the company’s ongoing commitment to maintaining a strong payout ratio.
Focus on Dividends Over Share Buybacks
As the largest tobacco company in the U.S., Altria has consistently prioritized its dividend over share repurchases. While some investors have expressed a desire for a more balanced approach to capital return, especially given the relatively low valuation of Altria shares—trading at around 10 times projected 2024 earnings—the company has remained steadfast in its focus on dividends.
