While the rest of the stock market was on fire last year, Altria (MO -0.13%) was turning to ashes. Shares of the Marlboro maker fell 12%, according to data from S&P Global Market Intelligence, as its strong dividend wasn't enough to attract investors to a business model that many think is in an inevitable decline.

There was no singular piece of news that pushed Altria stock lower last year, but mostly disappointing earnings reports and a revelation by rival British American Tobacco at the end of the year led to 2023 ending in the loss column.

As you can see from the chart, Altria significantly underperformed the S&P 500.

^SPX Chart

^SPX data by YCharts

Is Altria going up in smoke?

For years, Altria has been trying to diversify away from smokeable tobacco products to next-gen products like heat-not-burn sticks and vaporizers, but those efforts have been mostly futile. The company has also been forced to take massive writedowns on its investments in JUUL and cannabis grower Cronos Group.

In 2023, those challenges mostly continued. The tobacco stock's first major slide of the year came in late March after its investor conference failed to persuade investors of the opportunity in front of it.

In its investor day conference, Altria lowered its earnings-per-share growth target to mid-single digits through 2028 and didn't announce any moves to unlock value that some investors had hoped for, such as selling its stake in AB InBev.

Altria's stock was roughly flat through the second quarter, and the company trimmed its guidance after it completed the NJOY acquisition in June.

The stock slipped in the third quarter in line with the S&P 500, and then plunged in October on its third-quarter earnings report, falling 8.3% on Oct. 26 as it cut its guidance to reflect increased spending on smoke-free research and the amortization of $50 million in intangible assets related to the NJOY acquisition.

Finally, Altria stock fell 3% on Dec. 6 after British American Tobacco, which owns rival brands like Camel, said it was taking a write-down of $31 billion on the value of its U.S. cigarette brands, reflecting macro headwinds and its vision to build a smokeless world.

A pack of cigarettes.

Image source: Getty Images.

What's next for Altria?

Altria remains a dividend powerhouse, currently offering a dividend yield of 9.6%, and the company expects to raise its dividend by mid-single digits over the coming years.

However, Altria still faces a number of headwinds, including declining revenue, a double-digit decline in cigarette volumes, and a failure to find another growth business.

Dividend investors should be aware that the stock could easily move lower if current trends don't change.