Core Viewpoint - Altria remains an attractive investment for income investors due to its long history of dividend increases and its current high dividend yield of 7% [1][14] Company Strategy - Altria has faced challenges over the past decade due to declining smoking rates and strategic missteps, including a 12billioninvestmentinJuulandafailedinvestmentinCronosGroup[5]−Thecompanyhasshiftedfocustosmoke−freeproducts,sellingtherightstomarketIqosbacktoPhilipMorrisInternationalandinvestinginNjoy,whichhasreceivedFDAmarketingauthorizationforitspod−basede−vaporproduct[6][8]−Altria′snext−genportfolioincludeson!,anoralnicotinepouch,andanewheatedtobaccoproductcalledPloom,developedinpartnershipwithJTGroup[7]MarketPerformance−Njoy′sconsumablessawa15.34.84 in 2022, with adjusted EPS rising 3.4% to $5.12 in 2024, resulting in a 2.9% CAGR over the last two years [10] - The company plans to increase its dividend by mid-single digits annually, following a 4.1% increase in 2024, and targets a debt-to-EBITDA ratio of 2, currently at 2.1 [11] - Altria expects to maintain an adjusted operating margin of at least 60% through 2028, although it has struggled to meet growth targets and has adjusted its expectations for Njoy's cash flow contributions [12] Investment Outlook - Altria's stock trades at a price-to-earnings ratio of 12, with a 7% dividend yield, indicating potential for success even if not all 2028 goals are met [13] - In the current economic climate, Altria is positioned to potentially outperform the S&P 500, benefiting from its status in the consumer staples sector and the consistent demand for its products [14] - Overall, despite declining cigarette consumption, Altria is expected to be in a better position three years from now [15]
Altria(MO) The Motley Fool·2025-04-27 09:25