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Altria Declares Fresh Dividend; Yield Is 8%

By Eric Volkman - Dec 17, 2020 at 8:11AM

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While this should keep the company on the list of favorite dividend stocks, Altria faces considerable challenges these days.

Altria's ( MO 1.51% ) first dividend payment of 2021 will be $0.86 per share, the company's board of directors has declared. It will be handed out on Jan. 11 to investors of record as of Dec. 28.

The move will support Altria's status as a favorite dividend stock, especially since its yield (a shade under 8%) is quite high relative to that of other big companies. This is supported by cash flow that continues to be robust, even though the tobacco business has become challenging over the past few years due to regulatory limits and the ever-growing trend of healthier living throughout the world.

Man putting a card reading DIVIDENDS into his suit breast pocket.

Image source: Getty Images.

Another thing dividend stock investors like about Altria's payout is the fact that it is extremely steady and reliable, particularly considering those difficulties. The company has made sure to distribute it every quarter, a tendency that stretches back for decades. Altria also raises it annually, if not necessarily by much. The latest hike was a 2% bump announced in May.

Meanwhile, Altria's making a play for the future by investing in two segments that it believes have good potential. One is marijuana, with a $1.8 billion investment in Cronos Group, and the other is in next-generation tobacco products like Juul, in which it holds a 35% stake (the company also holds exclusive U.S. distribution rights for iQOS products from peer Philip Morris International). 

It remains to be seen how these ventures will pan out. Along with the bulk of the marijuana industry, Cronos is struggling. And the value of the Juul investment was written down substantially in Altria's latest quarterly report. On the other hand, recent Food and Drug Administration (FDA) approval of the latest iQOS device lays the foundation for robust sales in the U.S.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Altria Group, Inc. Stock Quote
Altria Group, Inc.
$44.59 (1.51%) $0.67
Philip Morris International Inc. Stock Quote
Philip Morris International Inc.
$91.40 (2.26%) $2.02
Cronos Group Stock Quote
Cronos Group
$4.29 (3.22%) $0.13

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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