Over its history, Altria (MO +0.35%) has been one of the best-performing stocks on the market, returning 20% annually for much of that time thanks to strong dividend growth and the resilience and recession-proof nature of the tobacco sector.
Over the last decade, however, the stock's performance has been much more pedestrian as smoking rates in the U.S. continue to decline and the company's efforts to diversify away from cigarettes have mostly backfired. That includes its investments in Cronos Group and Juul Labs, which led to billions in losses, and, more recently, its acquisition of NJOY faced a setback when the U.S. International Trade Commission banned the sale of NJOY Ace devices and pods when it found that it had infringed on patents held by Juul.
Despite those challenges, Altria is up roughly 50% over the last two years, trending with a broader surge in tobacco stocks on promising signs for smoke-free products, including Altria's On! oral nicotine pouches.
However, Altria's core business continues to decline, which means the biggest risk facing the company is that it's not successful with its smoke-free, next-generation products.
Image source: Getty Images.
What the numbers say
Altria's revenue has mostly declined in recent years, but the company has managed to grow profits by raising prices. In 2025, Altria's revenue after excise taxes fell 1.5% to $20.1 billion, but its adjusted earnings per share rose 4.4% to $5.42.
Domestic cigarette shipments fell by 10% to 61.8 million sticks, and raising prices on a product with declining consumption isn't a sustainable business model, especially when volume is declining by 10%.
Shipments of On!, which competes with Philip Morris's Zyn, rose 11% for the year to 177.8 million cans. However, a decline in On!'s market share in the fourth quarter, which seemed to be due to promotions from Zyn, meant shipment volumes were up less than 1%.
Altria is targeting earnings-per-share growth of 2.5% to 5.5% to $5.56-$5.72 in 2026, which is a solid return when combined with its 6.3% dividend yield.
NYSE: MO
Key Data Points
The risk is clear
Altria's efforts to diversify away from cigarettes over the last decade still have not yielded much, especially compared to peers like Philip Morris and British American Tobacco, which are seeing more success with smoke-free products.
Smoking rates are especially low among young Americans, though vaping is more common, meaning that Altria's cigarette sales will almost certainly continue to decline. At some point, the price hike strategy won't be enough to keep profits growing. If the company can't replace that lost profit with new products, the stock is eventually destined to head lower.
