Many investors know that tobacco company Altria Group (MO 0.56%) owns a stake in beer giant Anheuser-Busch InBev -- a 10% stake, to be specific. But some investors may not have peeled back the facts to see what this means for Altria, both now and moving forward, so I'm going to do that today.

Altria's decision to hold onto its stake has proven a genius move, and it's likely to pay handsomely down the road.

The stake's impact on Altria's valuation

Altria isn't perfect. Jumping into a $12.8 billion marriage with electronic cigarette company Juul in late 2018 has proven to be a colossal failure. And Wall Street has punished the stock, bludgeoning the shares to a valuation well short of its long-term norm. Analysts believe Altria's 2022 earnings per share (EPS) will come in at roughly $4.86, valuing the stock at a price-to-earnings ratio (P/E) ratio of just over 9, and that's against a decade-median P/E of 17.5.

But Altria is even cheaper in reality: The company's 10% stake in Anheuser-Busch is worth roughly $10.6 billion based on its current $106 billion market capitalization. If you back that out of Altria's market value, the stock's P/E falls even further to just 8!

Beating Altria for bad execution is more than fair, but when does a stock fall enough? Altria is still a Dividend King with a remarkably durable business, surviving generations of slowly declining tobacco use in the United States.

$10.6 billion and likely growing

Altria was eligible to sell its stake in Anheuser-Busch in October of last year once a lock-up period from Anheuser-Busch's SABMiller merger had expired.

But COVID-19 and a volatile stock market put a damper on Anheuser-Busch's share price, and Altria chose to hold its stake. That could prove to be the right decision, because Anheuser-Busch has steadily paid down its massive balance sheet and could finally be in a position to resume growth over the years.

Analysts believe Anheuser-Busch could grow EPS by almost 9% annually over the next three to five years. Then you factor in the stock's valuation, which at a P/E of 18 based on 2023 estimates is below its decade median of 24.

The stock could remain under its historic P/E ratio, and EPS growth alone could generate $1 billion in asset value for Altria's stake each year. And if Wall Street rewards Anheuser-Busch's stock with a higher P/E, even better! Altria wouldn't be in this fortunate position if it had simply rushed to cash in at its first chance. Sometimes you need to know when to fold them and when to hold them.

The strategic importance of that money

It's also doubtful that Altria will sit on its stake forever. The company's trying to build a sustainable business beyond cigarettes while smokeable products still produce enough growth and cash flow to raise its dividend each year.

Altria's made some moves, including developing the On! brand of oral nicotine pouches, but the Juul move was a colossal flop that sent Altria back to the drawing board.

The company will probably sell some or all of its stake to fund product development or another acquisition. But that's the long-term, and Altria today is still a Dividend King with an 8.1% dividend yield and dirt-cheap valuation. The stock's golden era ended when everyone realized smoking is terrible for you, but it's still a competent dividend stock to consider today.