GuruFocus Research
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Delving Into the Dividend Dynamics of Altria Group Inc
Altria Group Inc (NYSE:MO) recently announced a dividend of $0.98 per share, payable on 2024-01-10, with the ex-dividend date set for 2023-12-20. 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?
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Altria Group Inc comprises Philip Morris USA, U.S. Smokeless Tobacco, John Middleton, Horizon Innovations and Helix Innovations. It holds a 10% interest in the world's largest brewer, Anheuser-Busch InBev. Through its tobacco subsidiaries, Altria holds the leading position in cigarettes and smokeless tobacco in the United States and 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. Dividends are currently distributed on a quarterly basis. Altria Group Inc has increased its dividend each year since 1970. The stock is thus listed as a dividend king, an honor that is given to companies that have increased their dividend each year for at least the past 53 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Altria Group Inc's Dividend Yield and Growth
As of today, Altria Group Inc currently has a 12-month trailing dividend yield of 9.00% and a 12-month forward dividend yield of 9.29%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Altria Group Inc's annual dividend growth rate was 3.90%. Extended to a five-year horizon, this rate increased to 7.00% per year. And over the past decade, Altria Group Inc's annual dividends per share growth rate stands at 8.60%.
Based on Altria Group Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Altria Group Inc stock as of today is approximately 12.62%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-09-30, Altria Group Inc's dividend payout ratio is 0.78, which may suggest that the company's dividend may not be sustainable.
Altria Group Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Altria Group Inc's profitability 8 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported net profit in 9 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Altria Group Inc's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Altria Group Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Altria Group Inc's revenue has increased by approximately 2.70% per year on average, a rate that underperforms than approximately 72.09% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Altria Group Inc's earnings increased by approximately 4.70% per year on average, a rate that underperforms than approximately 56.82% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 0.30%, which underperforms than approximately 65.71% of global competitors.
Next Steps
In conclusion, while Altria Group Inc's dividend payments have been consistent and growing, investors should consider the payout ratio, profitability, and growth metrics when assessing the sustainability of these dividends. The payout ratio indicates a high percentage of earnings being returned to shareholders, which could raise concerns about future growth funding. However, the company's strong profitability rank and growth rank suggest a resilient financial standing. The mixed performance in revenue and earnings growth compared to global competitors warrants a closer analysis of the company's strategic initiatives and industry position. As value investors, it is crucial to weigh these factors to determine the long-term viability of Altria Group Inc as a dividend investment. For further research on high-dividend yield stocks, GuruFocus Premium users can utilize the High Dividend Yield Screener.
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 circ*mstances. 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.
This article first appeared on GuruFocus.
