Altria (MO +1.95%) is the dominant cigarette company in the United States. The company's Marlboro brand has an overall cigarette market share of 40%, with a share of nearly 60% in the premium segment. The company's discount brands had a share of 32% of the discount space. However, if the next five years are anything like the last five years, Altria's future could be pretty bleak.
Where was Altria in 2020?
Altria's cigarette volume in 2020 stood at 101.4 billion smokes for the year. That was down 0.4% compared to 2019. In the fourth quarter of the year, the company's volume was 23.8 billion, representing a 3.1% year-over-year increase. Revenue for the year came in at roughly $26.2 billion, up 4.2% from 2019. That was a high-water mark for the business.
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By the end of 2024, Altria's cigarette volume had declined to 68.6 billion. Revenue totalled $24 billion. The trends have been decidedly negative, with volume dropping 7.5% in 2021, 9.7% in 2022, 9.9% in 2023, and 10.2% in 2024. Through the first nine months of 2025, volume was off by 10.6% year over year.
On the income statement, overall revenue decreased by 0.5% in 2021 while revenue excluding tobacco taxes rose 1.3%. In 2022, revenue fell on both fronts, with overall revenue off by 3.5%. In 2023 the top line drop was 2.4%, with a decline of 1.9% in 2024. Through the first nine months of 2025, revenue fell 3.4% year over year.
Consumer staples companies are generally considered reliable, slow-growing businesses. Altria has not been either of those things, despite the board of directors' continued annual dividend increases. The stock's well-above-market 7.4% dividend yield is really one of the few reasons to consider buying the stock at this point. The other reason is a deep belief that management will, somehow, be able to turn the business around.
What happens if the negative trends continue?
As noted above, cigarette volume stood at 101.4 billion in 2020. Annualizing the third quarter of 2025, the run rate for volume was around 64.8 billion. That's a decline of 36%, which should be a very troubling figure for investors to see. If the company loses a similar amount of volume over the next five years, volume will have declined to roughly 41.5 billion. That would be less than half the volume of cigarettes produced in 2020.
On the revenue side, the top line was $26.2 billion in 2020. Annualizing the third quarter of 2025, the revenue run rate would be around $24.3 billion, a decline of around 7%. That number is a bit of a positive, actually, since it is much smaller than you might expect based on the huge volume drop. Essentially, Altria has been offsetting volume declines with price hikes.
NYSE: MO
Key Data Points
That tactic actually allowed the company to continue generating higher revenue for many years. However, this trend has clearly shifted, with price increases no longer able to fully offset the impact of volume declines, even though the revenue declines are still more modest than the volume drops. Looking at the bottom line, stock buybacks have allowed the company to continue generating small earnings increases despite the clearly negative fundamental trends in its business. If the revenue trends continue, the company's top line could decline to $22.6 billion five years from now.
Be careful if you reach for Altria's fat yield
The company could continue to buy back stock at a rapid clip to support earnings, but that would just be papering over the problem. If the next five years are anything like the last five, Altria's business fundamentals will continue to deteriorate. That makes this high-yield stock a highly risky investment. Most conservative income investors should probably steer clear of it.
