Many dividend stocks saw a decline in 2022 and 2023 as rising interest rates led investors to safer options like CDs and T-bills. However, in 2024 and 2025, many of these stocks made a comeback as the Federal Reserve cut interest rates six consecutive times.
One notable dividend strategy focuses on Altria (NYSE:MO), a leading tobacco company in the U.S. Over the last two years, Altria’s stock climbed more than 50%, compared to a 40% increase in the S&P 500 index. Let’s explore why it might be an appealing place for your $10,000—or more—over the long term.
Altria, previously known as Philip Morris USA, has divided its international arm into: Philip Morris International. Investing in Altria can seem risky since the smoking rate among U.S. adults has dropped to its lowest in six decades.
Still, Altria’s flagship brand, Marlboro, holds over 40% of the U.S. retail cigarette market. The company has been consistently raising prices to compensate for declining shipments, along with executing share buybacks to enhance earnings per share.
Additionally, Altria is diversifying its product range with smokeless options like e-cigarettes and nicotine pouches, aiming to lessen its reliance on traditional cigarettes. The company expects this shift to pick up pace following its acquisition of e-cigarette leader NJOY, which finalized in 2023.
Analysts project Altria’s adjusted earnings per share to grow by 3% in 2026 and 4% in 2027. The firm generates sufficient cash flow to support its future dividend yield of 7.1%, having increased dividends 60 times over the past 56 years. With its stock priced at around $62, it appears reasonably valued with a forward P/E ratio of 11.
That being said, labeling Altria as a foolproof investment might be a stretch. The company’s core cigarette business is facing a decline, potentially leaving it with limited options to raise prices or reduce costs in response to decreasing shipments. There’s also a risk that its smokeless products may not gain traction quickly enough to offset these challenges.
Nonetheless, I think Altria can still be a steady income stock worth holding onto for the foreseeable future. The company has various strategies to maximize revenue from existing customers, and its attractive valuation combined with a high yield should cushion it against declines in the next market downturn. While it may not be the most exciting stock, it can offer consistent returns in a turbulent market.
Before making a decision to invest in Altria Group, keep in mind some important considerations:
