Core Viewpoint - Altria Group Inc. continues to thrive in a challenging economic environment, supported by a strong dividend history and significant cash flow, making it an attractive investment option despite the declining cigarette usage trend in the U.S. [1][2][6] Financial Performance - Altria's revenue for the most recent quarter was $5.3 billion, reflecting a 6% year-over-year decline, while adjusted diluted earnings per share (EPS) increased by 6% to $1.23 [7] - The company maintains a guidance of a 2% to 5% increase in EPS for the full year, indicating confidence in its financial outlook [7] Dividend Policy - Altria has raised its dividend for 56 consecutive years, with a current dividend of $4.24, resulting in a forward yield of 7.3%, enhancing its appeal during stock market downturns [2][4] - The company plans to continue increasing its dividend through 2028, supported by strong cash flow and a robust balance sheet [2] Market Context - Approximately 29 million Americans smoke cigarettes, contributing to Altria's sustained revenue despite a modest decline in overall cigarette use over the past decade [4][6] - The ongoing affordability crisis, characterized by rising prices for essential goods, positions Altria's products as inflation-proof, potentially making it a favorable investment choice [5][8]

For some Americans, cigarettes are an essential product, despite the cost of smoking averaging $3,000 per smoker per year. ...

Core Points - The U.S. Food and Drug Administration (FDA) has authorized the marketing of six nicotine pouch products owned by Altria [1] - This authorization is part of a pilot program designed to expedite the review process for such products [1] Company Summary - Altria has received FDA approval for six of its nicotine pouch products, indicating a significant step in the company's product portfolio expansion [1] - The pilot program aims to streamline the regulatory process for nicotine products, potentially benefiting Altria and similar companies in the industry [1] Industry Summary - The FDA's initiative reflects a broader trend towards the regulation and acceptance of alternative nicotine delivery systems [1] - The approval of these products may influence market dynamics and competition within the nicotine pouch segment [1]

Core Viewpoint - Tobacco stocks, particularly Altria, have historically provided strong returns but are currently facing challenges due to declining cigarette sales and setbacks in transitioning to next-generation products [2][3]. Performance Analysis - Over one, three, and five-year periods, Altria has underperformed the S&P 500 in terms of price appreciation but has outperformed on a total-return basis over the last year and five years [4][6]. - Altria's stock performance has been modest over the long term, with a significant impact from failed investments in Juul and Cronos Group [7]. Dividend Insights - Altria is primarily favored by investors for its high dividend yield, currently at 7.2%, and a strong history of annual dividend increases, having raised its dividend 60 times in the last 56 years [9]. - The company’s reliable cash flow supports its dividend strategy, making it attractive for dividend-focused investors [11]. Future Outlook - Despite the decline in cigarette sales, Altria aims to enhance profits through price increases on cigarettes and new product launches, including Njoy and On! [10]. - The stock is currently trading at a low price-to-earnings ratio of 11.3, indicating potential for price gains alongside its strong dividend [11].

Core Viewpoint - Coca-Cola is positioned to be a more compelling long-term investment compared to Altria, the leading tobacco company, due to its diversified product portfolio and growth potential in a changing market landscape [5]. Group 1: Altria Overview - Altria is a leading tobacco company in America, known for its flagship Marlboro brand, which holds nearly half of the retail cigarette market [2]. - The company is expanding its portfolio with smoke-free products like e-cigarettes and nicotine pouches as adult smoking rates decline [2]. - Altria has consistently increased its dividend since spinning off its international business in 2008, currently offering a forward yield of 7.2% and trading at ten times forward earnings [3]. Group 2: Coca-Cola Overview - Coca-Cola has developed a diverse range of products beyond its traditional sugary sodas, including bottled water, fruit juices, teas, and alcoholic beverages, which has helped mitigate the decline in soda consumption [8]. - The company reported organic sales growth of 16% in 2022, 12% in 2023, and is projected to maintain 12% growth in 2024, contrasting with Altria's declining sales [9]. - Coca-Cola operates a capital-light business model, producing only concentrates and syrups, which allows for high gross margins and more cash for marketing and dividends [10]. Group 3: Financial Performance and Outlook - Analysts expect Coca-Cola's adjusted EPS to grow at a CAGR of 6% from 2024 to 2027, while Altria's adjusted EPS is expected to grow at a CAGR of 4% [12]. - Coca-Cola has a forward dividend yield of 2.9% and has raised its payout for 63 consecutive years, making it a "Dividend King" [13]. - Over the past decade, Coca-Cola has delivered a total return of 126%, while Altria's total return was 99%, indicating Coca-Cola's stronger long-term performance [14]. Group 4: Market Trends and Future Prospects - The S&P 500 is near its all-time high, and the Federal Reserve is expected to cut benchmark rates in 2026, which may lead investors to favor dividend stocks like Coca-Cola over growth stocks [16]. - Coca-Cola is anticipated to benefit from this trend, positioning it as a better investment option compared to Altria for 2026 and beyond [16].

Core Insights - Altria Group, Inc. is observing significant growth in the e-vapor category, with U.S. adult usage projected to reach approximately 21 million consumers by the end of Q3 2025, primarily driven by disposable products [1][9] E-Vapor Market Dynamics - The recent growth in the e-vapor market is largely attributed to disposable e-vapor products, which have added around 2.4 million users and now represent over 60% of the category. These products are typically flavored, low-priced, and widely available, although many lack FDA authorization [2][9] - Altria's e-vapor business, centered around the NJOY brand, focuses on FDA-authorized products, which limits its participation in the segment that is driving most of the new user adoption [2] Regulatory Environment - Altria has advocated for stronger enforcement against unauthorized e-vapor products. Federal agencies have recently intensified actions against illicit e-vapor, including coordinated raids and large-scale seizures, indicating increased regulatory scrutiny in the category [3][9] Financial Performance and Valuation - Altria recorded a non-cash goodwill impairment charge of $873 million in its e-vapor business during the first nine months of 2025, reflecting the challenges faced in this segment [4] - The company's shares have increased by 1% over the past month, compared to the industry's growth of 1.6% [8] - Altria's forward price-to-earnings ratio stands at 10.57X, which is lower than the industry average of 14.19X [10] Earnings Estimates - The Zacks Consensus Estimate for Altria's 2025 earnings per share has increased by 1 cent to $5.44, while the estimate for 2026 has decreased by 1 cent to $5.56 [11]

Core Insights - Altria has a current dividend yield of 7%, significantly higher than the S&P 500 average, although it is below its five-year average of 7.7% [1][6] - The company has increased its annual dividend for 56 consecutive years, qualifying it as a Dividend King, with a target payout ratio of around 80% of adjusted earnings per share [6] Financial Metrics - Altria's annual dividend is $4.24 per share, requiring ownership of 472 shares to generate $500 in annual dividend income, equating to a total investment of approximately $27,716 at the current stock price of $58.72 [2][5] - The current market capitalization of Altria is $99 billion, with a stock price of $59.32 [5] Business Performance - Altria's business is facing challenges due to a decline in the number of U.S. adult smokers, leading to reduced volume; however, the company has managed to offset some of this decline through its pricing power [4] - Despite stagnant revenue growth, Altria has maintained a gross margin of 71.98% [6]

Leadership Transition - Altria Group's CEO Billy Gifford will step down after the annual shareholder meeting on May 14, 2026, with Salvatore "Sal" Mancuso appointed as his successor [1][4] - Mancuso has been with Philip Morris since 1990, holding various finance roles, including senior vice president of finance and procurement [3] - Gifford will remain with Altria as a consultant until the end of 2026 to ensure a smooth transition [5] New CFO Appointment - Heather Newman will succeed Mancuso as Chief Financial Officer after the transition [2] - Newman has been in her current role since 2019, overseeing corporate development, international strategy, and Altria's digital and technology organization [6] Executive Insights - Board Chair Kathryn McQuade expressed confidence in Mancuso's industry knowledge and commitment to Altria's 2028 Enterprise Goals [4] - Gifford highlighted his confidence in Mancuso's leadership abilities and commitment to Altria's strategy [5]

Core Viewpoint - Altria Group has shown a total return of 13.5% over the past year, primarily driven by high dividend payments, but it still underperformed compared to the S&P 500's total return of 15.6% [2][3]. Performance Analysis - Altria's stock price increased by 6.9% over the past year, which is significantly lower than the S&P 500's increase of 13.8% [2]. - A $1,000 investment in Altria would have grown to $1,135, while the same investment in the S&P 500 would have reached $1,156 [3]. Dividend Insights - Altria has a strong focus on dividends, with the board recently increasing the payout by 3.9% to $1.06 per share, resulting in a dividend yield of 7.2%, which is substantially higher than the S&P 500's yield of 1.1% [4][6]. Business Challenges - Altria's revenue from smokeable products, particularly cigarettes, has been declining, with a 1.3% drop in the third quarter to $4.6 billion. The company is facing challenges with falling cigarette volume and a decrease in market share, especially for its Marlboro brand [5]. Investment Considerations - Despite the attractive dividend yield, the long-term business prospects for Altria appear bleak, leading to a recommendation to avoid investing in the shares [5].

Core Insights - Not all high-yield investments are equally valuable, with four distinct categories identified: declining businesses, manufactured distributions, selling shares, and well-covered qualified dividend yields [1] Group 1: Investment Categories - Declining businesses represent a category of high-yield investments that may not be sustainable in the long term [1] - Manufactured distributions indicate yields that are artificially created rather than derived from genuine business performance [1] - Selling shares as a method to provide high yields can lead to dilution and long-term value erosion for investors [1] - Well-covered qualified dividend yields are considered a more stable and reliable source of income for investors [1]