As a major vice stock, Altria Group (MO) (formerly Philip Morris and the maker of Marlboros) certainly has its fair share of detractors. Investors that are willing to own the name, however, have made out handily in recent years. As shown in the chart below, Altria has soared to daily new highs over the last few weeks, and it's up 23.11% year to date. That doesn't even include the dividend payout that shareholders receive of more than 5% per year.
While there may be plenty of reasons to shun Altria Group, valuation has really never been one of them...until now, maybe. Below is a chart of Altria's trailing 12-month P/E ratio from 1990 to present. As shown, Altria's P/E has skyrocketed recently up to 15.39. Now 15.39 may not seem that high, but as a non-cyclical company that's mostly owned for its yield, it certainly raises our eyebrows. Consider that there are 267 (more than half) stocks in the S&P 500 that now have a P/E that is lower than Altria's.
We've mentioned it many times before, but the Fed's ZIRP (zero interest rate policy) has consequences, one of which might be the artificial increase in high-dividend paying stocks like Altria Group.
