Altria Group's Seasonality, Projection, And Dividend Distributions Target Analysis

| About: Altria Group, (MO)

Summary

Due to continued requests by readers, I decided to provide an article on one of my longest held stocks, MO.

This article first provides a brief overview of MO’s business operations to get a better understanding of the company’s four main product segments.

This article then provides a unique, comparative analysis of MO’s shipment volume over the past several years and identifies certain seasonal trends which impacted the company’s adjusted diluted EPS.

In addition to providing several projections regarding MO’s Q4 2015 earnings, this article provides a dividend distribution guide for readers to use as the company reports over the foreseeable future.

My current buy, sell, or hold recommendation for MO is in the “Conclusions Drawn” section of the article.

Focus of Article:

The focus of this article is to analyze Altria Group Inc.'s (NYSE:MO) business operations to spot certain patterns that have occurred over the past several years. This article first provides a brief overview of MO's business operations to get a better understanding of the company's four main product segments. This article then provides a unique, comparative analysis of MO's shipment volume over the past several years and identifies certain "seasonal trends" which impacted the company's adjusted diluted EPS. This analysis will show the past and projected data with supporting documentation within four tables. The first three tables will compare MO's shipment volume during 2013, 2014, and the first three quarters of 2015. This includes a breakdown within each product segment and my projections for the fourth quarter of 2015. The fourth table provides MO's quarterly and annual adjusted diluted EPS and compares this metric to the company's quarterly and annual dividend distributions.

I am writing this article due to the continued requests to provide an analysis on MO. MO has been the "steady Eddy" stock within my investment portfolio for the past six years. Due to the recent market downturn and some market participants shifting to "defensive" stocks, I believe MO could be a good investment (at the right price) for readers wanting limited downside risk while obtaining an attractive yield. Understanding certain correlations within a company's business operations can shed some light whether a company is possibly "overvalued" or "undervalued" strictly per a "numbers" analysis. This is not the only data that should be examined to initiate a position within a particular stock/company. However, I believe this analysis would be a good "starting-point" to begin a discussion on the topic. My current BUY, SELL, or HOLD recommendation for MO will be in the "Conclusions Drawn" section at the end of this article.

MO's Product Segments Overview:

Before we begin MO's shipment volume seasonality analysis, let us first get accustomed to the company's product segments provided in Table 1 below. This will be beneficial when discussing MO's seasonality analysis regarding the company's shipment volume over the past several years.

Table 1 - MO Shipment Volume By Product Segment (2013)

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(Source: Table created entirely by myself, obtaining historical shipment volume data from the SEC's EDGAR Database)

Table 1 above provides quarterly shipment volume broken down by the following four MO product segments: 1) cigarettes (by number of sticks; manufactured and sold by Phillip Morris USA Inc.); 2) cigars (by number of sticks; manufactured and sold by John Middleton Co.); 3) smokeless tobacco (by number of cans and packs; most manufactured and sold by U.S. Smokeless Tobacco Company LLC); and 4) wine (by number of cases; produced and distributed by Ste. Michelle Wine Estates Ltd.). Let us briefly describe the sub-classifications that comprise each of the four main product segments listed in Table 1.

The first sub-classification within the cigarettes product segment is "Marlboro®" (Marlboro). Simply put, Marlboro is MO's "iconic brand" which accounts for a large proportion of sales/revenue. This includes all products under the Marlboro name (red, gold, black, etc..). The second sub-classification within the cigarettes product segment is "other premium". This includes the brands "Benson & Hedges®", "Parliament®", and "Virginia Slims®". As one can see in Table 1 above, this sub-classification accounted for only a fractional share of sales/revenue when compared to Marlboro during 2013 (lower shipment volume). The third sub-classification within the cigarettes product segment is "discount". This includes the brands "Basic®" and "L&M®".

The first sub-classification within the cigars product segment is "Black & Mild®" (Black & Mild). The second sub-classification within the cigars product segment is "other". As one can see in Table 1, this sub-classification accounts for only a fractional share of sales/revenue when compared to Black & Mild during 2013 (lower shipment volume).

The first sub-classification within the smokeless tobacco product segment is "Copenhagen®" (Copenhagen). The second sub-classification within the smokeless tobacco product segment is "Skoal®" (Skoal). The third sub-classification within the smokeless product segment is "other". As one can see in Table 1 above, this sub-classification accounts for only a fractional share of sales/revenue when compared to Copenhagen and Skoal during 2013 (lower shipment volume).

The first sub-classification within the wine product segment is "Chateau Ste. Michelle®". The second sub-classification within the wine product segment is "Columbia Crest®". The third sub-classification within the wine product segment is "14 Hands®". The fourth sub-classification within the wine segment is "other". Now that we have a better understanding of MO's four main product segments, let us now begin the company's seasonality analysis of its shipment volume over the past several years.

Seasonality Analysis of MO's Shipment Volume (2013 - 2015):

Still using Table 1 as a reference, during the second quarter of 2013, MO had a material (at or greater than 10%; dark green shading) increase in the total shipment volume of the company's cigarettes and smokeless tobacco product segments when compared to the first quarter of 2013. MO also had a modest (at or greater than 5% but less than 10%; light green shading) increase in the total shipment volume of the company's cigars and wine product segments. Simply put, all four main product segments had a notable increase in shipment volume during the second quarter of 2013 when compared to the prior quarter. This was one of the main reasons why MO was able to increase the company's adjusted diluted earnings per share ("EPS") from $0.54 per share for the first quarter of 2013 to $0.62 per share for the second quarter of 2013.

During the third quarter of 2013, MO had a modest increase in the total shipment volume of the company's cigars and smokeless tobacco product segments when compared to the second quarter of 2013. MO also had a minor (less than 5%; light yellow shading) increase in the total shipment volume of the company's cigarettes and wine product segments. Simply put, all four main product segments had an increase in shipment volume during the third quarter of 2013 but the percentage of growth slowed when compared to the prior quarter. This was one of the main reasons why MO was able to increase adjusted diluted EPS from $0.62 per share for the second quarter of 2013 to $0.65 per share for the third quarter of 2013. However, consistent with the lower percentage increase in shipment volume, MO's adjusted diluted EPS only increased $0.03 per share during the third quarter of 2013 versus an increase of $0.08 per share during the second quarter of 2013.

During the fourth quarter of 2013, MO had a material increase in the total shipment volume of the company's wine product segment when compared to the third quarter of 2013. In fact, all sub-classifications within this product segment experienced a huge "spike" in shipment volume. This was mainly due to the holiday season regarding gifts/presents. However, contrary to the prior two quarters, MO had a minor (less than 5%; yellow shading) decrease in the total shipment volume of the company's cigars product segment. In addition, MO had a modest (at or greater than 5% but less than 10%; light red shading) decrease in the total shipment volume of the company's cigarettes and smokeless tobacco product segments. As such, this was one of the main reasons why MO reported a decrease to adjusted diluted EPS from $0.65 per share for the third quarter of 2013 to $0.57 per share for the fourth quarter of 2013. MO's quarterly decrease in shipment volume in three out of the four main product segments (including the heaviest revenue generating product segment, cigarettes) directly attributed to a modest decrease in quarterly adjusted diluted EPS.

So, during 2013, I believe it is a safe assumption to state MO's quarterly total shipment volume had a direct impact on the company's quarterly adjusted diluted EPS per share amount. Now let us see if this type of direct correlation continued during 2014. To provide this analysis, Table 2 is provided below.

Table 2 - MO Shipment Volume By Product Segment (2014)

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(Source: Table created entirely by myself, partially using MO data obtained from the SEC's EDGAR Database [link provided below Table 1])

Using Table 2 above as a reference, during the first quarter of 2014, MO had a modest decrease in the total shipment volume of the company's cigarettes and smokeless tobacco product segments when compared to the fourth quarter of 2013. MO also had a material (at or greater than 10%; dark red shading) decrease in the total shipment volume of the company's cigars and wine product segments. Simply put, all four main product segments had a notable decrease in shipment volume during the first quarter of 2014 when compared to the fourth quarter of 2013. However, unlike a direct correlation between shipment volume and adjusted diluted EPS in 2013, MO was able to report a stable adjusted diluted EPS from $0.57 per share for the first quarter of 2014 when compared to the fourth quarter of 2013. As such, for this particular quarter, the direct correlation between MO's shipment volume and the company's adjusted diluted EPS "de-coupled" slightly. This was mainly due to the fact that overall sales did not materially drop during the first quarter of 2014 when compared to the prior quarter. This was more due to an inventory "build up" in the prior quarter where a greater proportion of "finished goods" were already shipped but not yet sold. It should also be noted MO's adjusted diluted EPS of $0.57 per share for the first quarter of 2014 was $0.03 per share higher than the company's adjusted diluted EPS of $0.54 per share for the first quarter of 2013. This was a gradual "year-over-year" increase of MO's adjusted diluted EPS which should be seen as a positive trend.

During the second quarter of 2014, MO had a material increase in the total shipment volume of the company's cigarettes, cigars, and wine product segments when compared to the first quarter of 2014. MO also had a modest increase in the total shipment volume of the company's cigars product segment. Simply put, all four main product segments showed a notable increase in shipment volume during the second quarter of 2014 when compared to the prior quarter. This was one of the main reasons why MO was able to increase the company's adjusted diluted EPS from $0.57 per share for the first quarter of 2014 to $0.65 per share for the second quarter of 2014. It should be noted this pattern was very similar to what was experienced during the second quarter of 2013. In addition, MO's adjusted diluted EPS of $0.65 per share for the second quarter of 2014 was $0.03 per share higher than the company's adjusted diluted EPS of $0.62 per share for the second quarter of 2013. Again, this was a gradual year-over-year increase of MO's adjusted diluted EPS which should be seen as a positive trend.

During the third quarter of 2014, MO had a minor increase in the total shipment volume of the company's cigarettes, cigars, and wine product segments when compared to the second quarter of 2014. MO also had a minor decrease in the total shipment volume of the company's smokeless tobacco product segment. Simply put, three out of the four main product segments showed an increase in shipment volume during the third quarter of 2014, but the percentage of growth slowed when compared to the prior quarter. This was one of the main reasons why MO was able to increase adjusted diluted EPS from $0.65 per share for the second quarter of 2014 to $0.69 per share for the third quarter of 2014. However, consistent with the lower percentage increase in shipment volume, MO's adjusted diluted EPS only increased $0.04 per share during the third quarter of 2014 versus an increase of $0.08 per share during the second quarter of 2014. It should be noted this pattern was very similar to what was experienced during the third quarter of 2013. It should also be noted MO's adjusted diluted EPS of $0.69 per share for the third quarter of 2014 was $0.04 per share higher than the company's adjusted diluted EPS of $0.65 per share for the third quarter of 2013. Yet again, this was a gradual year-over-year increase of MO's adjusted diluted EPS which should be seen as a positive trend.

During the fourth quarter of 2014, MO had a material increase in the total shipment volume of the company's wine product segment when compared to the third quarter of 2014. In fact, all sub-classifications once again experienced a huge "spike" in shipment volume during the fourth quarter. Again, this was mainly due to the holiday season regarding gifts/presents. Fairly consistent with the trend witnessed during the fourth quarter of 2013, MO had a modest decrease in the total shipment volume of the company's cigarettes and cigars product segments. In addition, MO had a minor decrease in the total shipment volume of the company's smokeless tobacco product segment. As such, consistent with the trend witnessed during the fourth quarter of the prior year, this was one of the main reasons why MO reported a decrease to adjusted diluted EPS from $0.69 per share for the third quarter of 2014 to $0.66 per share for the fourth quarter of 2014. MO's quarterly decrease in shipment volume in three out of the four main product segments (including the heaviest revenue generating product segment, cigarettes) directly attributed to a minor decrease in quarterly adjusted diluted EPS. However, it should also be noted MO's adjusted diluted EPS of $0.66 per share for the fourth quarter of 2014 was $0.09 per share higher than the company's adjusted diluted EPS of $0.57 per share for the fourth quarter of 2013. Once again, on a year-over-year basis, MO was able to increase adjusted diluted EPS which should be seen as a positive trend.

So, during 2014, I believe it is a safe assumption to once again state MO's quarterly total shipment volume had a direct impact on the company's quarterly adjusted diluted EPS per share amount (as was the case during 2013). Furthermore, I believe this analysis highlighted several distinct seasonal trends that occurred during 2013 and 2014. First, there was a notable increase in both shipment volume and adjusted diluted EPS during the second quarter of 2013 and 2014 when compared to each respective prior quarter. Second, there was a smaller increase in both shipment volume and adjusted diluted EPS during the third quarter of 2013 and 2014 when compared to each respective prior quarter. Finally, there was a decrease in both shipment volume and adjusted diluted EPS during the fourth quarter of 2013 and 2014 when compared to each respective prior quarter. With that being said, now let us see if this type of correlation/seasonal pattern continued during 2015. To provide this analysis, Table 3 is provided below.

Table 3 - MO Shipment Volume By Product Segment (2015)

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(Source: Table created entirely by myself, partially using MO data obtained from the SEC's EDGAR Database [link provided below Table 1])

Using Table 3 above as a reference, during the first quarter of 2015, MO had a modest decrease in the total shipment volume of the company's cigarettes and cigars product segments while having a minor decrease in its smokeless tobacco segment when compared to the fourth quarter of 2014. Consistent with what occurred during the first quarter of 2013 and 2014, MO also had a material decrease in the total shipment volume of the company's wine product segment. Simply put, all four main product segments had a notable decrease in shipment volume during the first quarter of 2015 when compared to the fourth quarter of 2014. However, unlike the de-coupling between shipment volume and adjusted diluted EPS in the first quarter of 2014, this directly correlated to a decreased adjusted diluted EPS during the first quarter of 2015 when compared to the prior quarter. MO reported an adjusted diluted EPS of $0.63 per share for the first quarter of 2015 versus $0.66 per share for the fourth quarter of 2014. However, it should also be noted MO's adjusted diluted EPS of $0.63 per share for the first quarter of 2015 was $0.06 per share higher than the company's adjusted diluted EPS of $0.57 per share for the first quarter of 2014. Again, this was a continued year-over-year increase of MO's adjusted diluted EPS which should be seen as a positive trend.

During the second quarter of 2015, MO had a material increase in the total shipment volume of the company's cigarettes, cigars, and wine product segments when compared to the first quarter of 2015. MO also had a modest increase in the total shipment volume of the company's smokeless tobacco product segment. Similar to the seasonal pattern that occurred during the second quarter of 2013 and 2014, all four main product segments showed a notable increase in shipment volume during the second quarter of 2015. This was one of the main reasons why MO was able to increase the company's adjusted diluted EPS from $0.63 per share for the first quarter of 2015 to $0.74 per share for the second quarter of 2015. In addition, MO's adjusted diluted EPS of $0.74 per share for the second quarter of 2015 was $0.09 per share higher than the company's adjusted diluted EPS of $0.65 per share for the second quarter of 2014. Again, this was a continued year-over-year increase of MO's adjusted diluted EPS which should be seen as a positive trend.

During the third quarter of 2015, MO had a minor increase in the total shipment volume of the company's cigarettes and wine product segments while having a modest increase in its cigars product segment when compared to the second quarter of 2015. MO also had a minor decrease in the total shipment volume of the company's smokeless tobacco product segment. Similar to the seasonal pattern that occurred during the third quarter of 2013 and 2014, three out of the four main product segments showed an increase in shipment volume during the third quarter of 2015 but the percentage of growth slowed when compared to the prior quarter. This was one of the main reasons why MO was able to increase the company's adjusted diluted EPS from $0.74 per share for the second quarter of 2015 to $0.75 per share for the third quarter of 2015. However, consistent with the lower percentage increase in shipment volume, MO's adjusted diluted EPS only increased $0.01 per share during the third quarter of 2015 versus an increase of $0.11 per share during the second quarter of 2015. With that being said, it should also be noted MO's adjusted diluted EPS of $0.75 per share for the third quarter of 2015 was $0.06 per share higher than the company's adjusted diluted EPS of $0.69 per share for the third quarter of 2014. Yet again, this was a continued year-over-year increase of MO's adjusted diluted EPS which should be seen as a positive trend.

During the fourth quarter of 2015, I am projecting MO had a material increase in the total shipment volume of the company's wine product segment. Consistent with prior fourth quarters, this projection is mainly due to the holiday season regarding gifts/presents. I am also projecting MO had a modest decrease in the total shipment volume of the company's cigarettes and cigars product segments while having a material decrease in its smokeless tobacco product segment. As such, consistent with the seasonal trends that occurred during the fourth quarter of 2013 and 2014, I am projecting MO will report a decrease to adjusted diluted EPS for the fourth quarter of 2015.

Through a detailed projection analysis beyond the scope of this particular article, I am projecting MO will report an adjusted diluted EPS of $0.67 per share for the fourth quarter of 2015. Even though this is a projected adjusted diluted EPS decrease of ($0.08) per share when compared to the third quarter of 2015, it should also be noted my projected adjusted diluted EPS of $0.67 per share for the fourth quarter of 2015 is $0.01 per share higher than MO's adjusted diluted EPS of $0.66 per share for the fourth quarter of 2014. Once again, this would be a continued year-over-year increase of MO's adjusted diluted EPS which should be seen as a positive trend. My projected range for MO's adjusted diluted EPS for the fourth quarter of 2015 is $0.65 - $0.69 per share.

Now let us analyze how MO's quarterly adjusted diluted EPS directly impacts the amount of the company's annual dividend distributions.

Analysis of MO's Adjusted Diluted EPS and the Impact on Annual Dividend Distributions:

MO's executive management team has stated the company's Board of Directors ("BoD") bases its dividend per share rate directly from adjusted diluted EPS. This is the reason why I analyzed this specific metric within MO's shipment volume product segment analysis above. To show the correlation between MO's adjusted diluted EPS and dividend distributions, Table 4 is provided below.

Table 4 - MO Adjusted Diluted EPS Versus Dividend Distributions (2014 - 2015)

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(Source: Table created entirely by myself, partially using MO data obtained from the SEC's EDGAR Database [link provided below Table 1])

Using Table 4 above as a reference, MO reported adjusted diluted EPS of $2.57 per share for 2014 (see blue reference "A" in Table 4 above). When broken out (which was briefly discussed in the shipment volume product segment analysis earlier in the article), MO reported adjusted diluted EPS of $0.57, $0.65, $0.69, and $0.66 per share for the first, second, third, and fourth quarters of 2014, respectively. MO's executive management team has continued to reiterate the BoD's "annual target distribution" is 80% of annual adjusted diluted EPS. It should be noted adjusted diluted EPS excludes one-time "special/extraordinary" items and certain tax/litigation expenses.

When calculated, MO's target distribution to shareholders for 2014 was $2.06 per share (see blue reference "C" in Table 4). This equates to a quarterly target distribution of $0.514 per share for 2014 (see blue reference "(C / 4)" in Table 4). In comparison, MO distributed dividends of $0.48, $0.48, $0.52, and $0.52 per share for the first, second, third, and fourth quarters of 2014, respectively. When combined, this was an annual dividend distribution of $2.00 per share. As such, when compared to MO's target distribution of $2.06 per share for 2014, the company had an annual underpayment of $0.06 per share. When basing MO's target distribution for 2014 based on the new "run-rate" dividend of $0.52 per share which began in the third quarter of 2014, the company theoretically had an annual overpayment of ($0.02) per share. This simply means MO would need to boost the company's 2015 annual diluted EPS by at least $0.02 per share to match the quarterly dividend increase of $0.04 per share which began in the third quarter of 2014.

Moving to 2015, I am projecting MO will report annual adjusted diluted EPS of $2.79 per share (see blue reference "A" in Table 4). When broken out (which was briefly discussed in the shipment volume product segment analysis earlier in the article), MO reported adjusted diluted EPS of $0.63, $0.74, and $0.75 per share for the first, second, and third quarters of 2015, respectively. I am projecting MO will report adjusted diluted EPS of $0.67 per share for the fourth quarter of 2015.

When calculated, I am projecting MO's target distribution to shareholders for 2015 will be $2.23 per share (see blue reference "C" in Table 4). This equates to a quarterly target distribution of $0.558 per share for 2015 (see blue reference "(C / 4)" in Table 4). In comparison, MO distributed dividends of $0.52, $0.52, $0.565, and $0.565 per share for the first, second, third, and fourth quarters of 2015, respectively. When combined, this was an annual dividend distribution of $2.17 per share. As such, when compared to my projected target distribution of $2.23 per share for 2015, MO would once again have an annual underpayment of $0.06 per share. When basing MO's target distribution for 2015 based on the new run-rate dividend of $0.565 per share which began in the third quarter of 2015, the company theoretically would have a projected annual overpayment of ($0.03) per share. This would match the same payout ratio from the previous year. Again, this simply means MO would need to boost the company's 2016 annual diluted EPS by at least $0.03 per share to match the quarterly dividend increase of $0.045 per share which began in the third quarter of 2015.

Conclusions Drawn:

This article has analyzed MO's business operations and spotted certain seasonal patterns that occurred over the past several years. This article first provided a brief overview of MO's business operations to get a better understanding of the company's four main product segments. This article then provided a unique, comparative analysis of MO's shipment volume over the past several years and identified certain "seasonal trends" which impacted the company's adjusted diluted EPS.

I believe MO's shipment volume product segment analysis highlighted several distinct seasonal trends that occurred during 2013, 2014, and 2015. First, there was a notable decrease in both shipment volume and adjusted diluted EPS during the first quarter of 2013. 2014, and 2015 when compared to each respective prior quarter (in this instance the fourth quarter of the preceding year). Second, there was a notable increase in both shipment volume and adjusted diluted EPS during the second quarter of 2013, 2014, and 2015 when compared to each respective prior quarter (in this instance the first quarter of the same year). Third, there was a smaller increase in both shipment volume and adjusted diluted EPS during the third quarter of 2013, 2014, and 2015 when compared to each respective prior quarter. Finally, there was a decrease in both shipment volume and adjusted diluted EPS during the fourth quarter of 2013, 2014, and 2015 when compared to each respective prior quarter (with the exception of the wine product segment).

As such, readers should now assume MO will likely continue to have specific seasonal trends within the company's four product segments which will impact future results when compared to the preceding quarter (for instance, Q4 2015 versus Q3 2015). From this article, readers should also understand to not just compare a quarter to a preceding quarter but more so to compare a quarter to the specific quarter of the preceding year when analyzing MO's adjusted diluted EPS (for instance Q4 2015 versus Q4 2014).

As important, it was determined by spotting certain seasonal trends within MO's business operations, one can more accurately project future quarterly results and dividend projections. As such, from the knowledge gained from performing the product segment seasonality analysis, this article provided a projection for MO's shipment volume and adjusted diluted EPS for the fourth quarter of 2015.

Finally, this article provided a general dividend sustainability "guide" for readers to use as MO reports future earnings. While some readers may have already known how to project MO's future dividend per share rate within a narrow range, I believe the guide outlined in this article can be used by all readers, regardless of one's financial background.

My BUY, SELL, or HOLD Recommendation:

Due to the recent market downturn and some market participants shifting to defensive stocks, I believe MO could be a good investment (at the right price) for readers wanting limited downside risk while obtaining an attractive yield. Through a continued dominant retail market share in the cigarettes and smokeless tobacco product segments (both continue to have over 50% retail market share), an attractive retail market share of machine-made large cigars (near 30%), and a growing wine product segment, I believe MO will continue to provide attractive quarterly results. As a "bonus" per se in my opinion, MO also currently has a 27% equity ownership stake in SAB Miller (OTCPK:SBMRY) who is currently in the process of being acquired by Anheuser-Busch Inbev SA/NV (NYSE:BUD). As such, MO's investors have some exposure to the brewing industry which adds even more "insulation" during a "bearish" market.

In addition, there is a high probability MO will continue to repurchase shares of common stock throughout most (if not all) quarters for the foreseeable future which has cumulative net benefits to shareholders. Furthermore, MO has a much lower impact from the recent negative foreign exchange adjustments suffered by most multinational companies due to the strengthening U.S. Dollar. In fact, one of MO's affiliates, Phillip Morris International Inc. (NYSE:PM) has recently suspended the company's stock repurchase plan due to the recent weakening of most global currencies when compared to the U.S. Dollar. For readers unfamiliar with MO, through the company's wholly-owned subsidiary Philip Morris USA Inc, MO mainly manufactures and sells cigarettes domestically, not internationally (that role applies to PM). Since MO only has to worry about the strengthening U.S. Dollar in regards to the company's 27% equity investment in SBMRY (likely conversion to BUD shares in the future), negative foreign exchange adjustments only have a minor impact on MO's financial statements. I believe MO's low exposure to negative foreign currency adjustments should be seen as positive catalyst for MO.

From the analysis provided above, including additional factors/catalysts not discussed within this particular article, I currently rate MO as a SELL when the company's stock price is trading at or greater than $65 per share, a HOLD when trading at greater than $55 per share but less than $65 per share, and a BUY when trading at or less than $55 per share.

As such, I currently rate MO as a HOLD since the company's stock price recently closed at $58.27 per share as of 1/22/2016. I will look to add to my existing MO position at an entry point of $55 per share.

Final Note: Each investor's BUY, SELL, or HOLD decision is based on one's risk tolerance, time horizon, and dividend income goals. My personal recommendation will not fit each investor's current investing strategy. I first initiated a position in MO back in late 2009 and continued to increase my position, at periodic intervals, from 2010 - 2013. Up until MO's dividend for the fourth quarter of 2014, I reinvested all quarterly dividends. Since then, I have elected to receive cash instead of reinvesting my dividends. In the future, I may decide to once again reinvest all dividends received. The weighted average purchase price of my entire MO position is currently $26.115 per share. This weighted average per share price excludes all dividends received/reinvested.

Disclosure: I am/we are long MO.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I currently have no position in PM or BUD. I currently have no direct position in SBMRY (only indirectly through my MO holdings).

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.