Please ensure Javascript is enabled for purposes of website accessibility

Better Buy: Altria vs. Prospect Capital

By Michael Finarelli and David Hanson – Mar 19, 2014 at 12:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

We've collected the most popular companies among readers and put them head-to-head in a good old-fashioned challenge we're calling The Motley Fool Better Buy Tournament.

In today's ­first-round match-up of The Motley Fool Better Buy Tournament, Altria (MO 0.76%) squares off against Prospect Capital (PSEC 2.04%) in a battle to determine which stock is the better buy now. The 64-company tournament pits two Motley Fool analysts against each other as they make the case for their stocks, with the winner determined by you, the readers.

It's no secret that Altria commands nearly 50% of the U.S. cigarette market. After all, the company does two things very well: It sells many of the leading cigarette brands, including the iconic Marlboro, and it makes boatloads of cash that it returns to investors in the form of dividends and share repurchases. With Altria sporting a yield north of 5% and a reasonable valuation based on historical standards, Motley Fool analyst Michael Finarelli believes the stock deserves a spot in your portfolio.

Motley Fool Financials analyst David Hanson believes Prospect Capital should move on to the next round because of the company's largest investment portfolio, which has excellent credit quality. Prospect Capital's BDC structure allows it to pass earnings through to shareholders, which results in a big dividend yield. Finally, David sees the company's large size and scale as a big advantage when it comes to finding new investments and getting favorable prices. 

Watch these analysts square off in the video below and then vote for a winner. Then check out the other companies in the Motley Fool Better Buy Bracket

This year's winning stock?
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Cast your vote in the poll below the video!

David Hanson has no position in any stocks mentioned. Michael Finarelli has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.