These Ultra-High Dividend Stocks Are Soaring: Is It Too Late to Buy Shares?

Core Viewpoint - Investors are shifting focus to high-yield stocks as the Federal Reserve signals a decline in interest rates, benefiting companies like Altria Group and British American Tobacco [1][11]. Altria Group - Altria Group offers a 7.29% dividend yield, down from over 9% earlier this year, and owns the leading premium cigarette brand, Marlboro, along with other nicotine products [3][12]. - Despite a decline in Marlboro shipment volumes by over 10% this year, Altria's operating income has increased by 51.8% over the last decade due to its pricing power [4][6]. - The company has a share repurchase program that has reduced shares outstanding by 13.7% in the last 10 years, supporting dividend growth [6]. - Altria is diversifying its revenue streams through cigars, vaping, and nicotine pouches, which are expected to offset declines in traditional cigarette volumes [5][12]. British American Tobacco - British American Tobacco has a higher dividend yield of 7.8% and faces similar challenges in the U.S. market, needing to raise prices to maintain profits [7][8]. - The company benefits from international market exposure, which is experiencing slower volume declines compared to the U.S., although it faces foreign currency risks [9]. - British American Tobacco is performing well in the new tobacco-free nicotine product segment, with smokeless products accounting for 16.5% of revenue in fiscal 2023 and achieving positive profitability [10]. - The company is well-positioned to maintain or grow its dividend due to cash-flow growth from its expanding product lines [10][12]. Investment Considerations - Both Altria and British American Tobacco offer dividend yields significantly higher than traditional savings accounts, making them attractive to income-focused investors, especially with anticipated declines in Treasury rates [11]. - The sustainability of their dividend yields is supported by their ability to counteract volume declines through price increases and contributions from new product divisions [12][13]. - There is potential for consistent growth in dividend-per-share payouts over the next five to ten years, appealing to long-term investors [13].