Many dividend stocks withered in 2022 and 2023 as rising interest rates drove investors toward risk-free CDs and T-bills. However, many of those stocks bounced back in 2024 and 2025 as the Federal Reserve reduced its benchmark rate six times in a row.
One of those blue chip dividend plays was Altria (MO +3.60%), the top tobacco company in America. Over the past two years, Altria's stock rallied more than 50% as the S&P 500 rose 40%. Let's see why it's still a great place to park $10,000 (or more) for the next few years.
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Why is Altria an excellent dividend stock?
Altria, formerly known as Philip Morris USA, spun off its overseas business as Philip Morris International (PM +0.87%) in 2008. As a domestic tobacco company, Altria might seem like a risky investment as U.S. adult smoking rates sink to their lowest levels in six decades.
However, its flagship Marlboro brand still controls more than 40% of the U.S. retail cigarette market, and it constantly raises prices to offset declining shipments, cuts costs, and repurchases its shares to boost earnings per share (EPS).
It's also expanding its portfolio of smokeless products -- including e-cigarettes, nicotine pouches, and snus -- to reduce its dependence on cigarettes and cigars. It expects its acquisition of the e-cigarette leader NJOY, which closed in 2023, to accelerate that transformation.
Analysts expect Altria's adjusted EPS to rise 3% in 2026 and 4% in 2027. It generates plenty of cash to cover its forward dividend yield of 7.1%, and it's raised its payout 60 times over the past 56 years. At $62, its stock still looks dirt cheap at 11 times forward earnings.
NYSE: MO
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Is Altria an evergreen investment?
I wouldn't call Altria an evergreen investment yet. Its core cigarette business is still shrinking, and it could run out of room to raise its prices or cut costs to offset its declining shipments. It could also struggle to expand its smokeless portfolio rapidly enough to counter that pressure.
That said, I believe Altria will remain a reliable income stock to buy and hold for a few more years. It has plenty of ways to squeeze more profits from its existing customers, and its low valuation and high yield should limit its downside during the next market crash. It's not an exciting stock, but it will generate stable income in an unstable market.
