Buy Low, Sell High? With Altria, It's Buy Yes, Sell No

Nov. 16, 2015 12:54 PM ETAltria Group, Inc. (MO)BUD, KHC, MDLZ, PM, SBMRY284 Comments
Mike Nadel profile picture
Mike Nadel
15.14K Followers

Summary

  • Is there any such thing as a bad time to buy Altria?
  • Over the years, even investors who have bought MO at all-time highs have been rewarded handsomely.
  • Thanks to the lucrative spin-offs and outstanding management, MO always has been more than meets the eye.

For those whose investing style is to buy quality, dividend-growing companies and hold them for years, there really has never been a bad time to buy Altria (NYSE:NYSE:MO), arguably the best stock ever to grace the market.

Yes, some days (and years) have been better times to buy it than others, as is the case with every stock. Over time, however, the tobacco giant - and long-time Dividend Growth Investing favorite - has proven to be resilient, dependable and highly profitable for shareholders.

Every so often, a Seeking Alpha contributor pens an article in which he or she says Altria is too richly valued. The author will say it's time to sell or, at the very least, not the right time to purchase.

The most recent example was Greg Vanderford's Nov. 10 piece, Continue To Stay Away From Altria For The Time Being.

I'm not picking on Greg, nor am I going to pick apart his article. Greg makes many good points about Altria's valuation, as well as some of the macro issues that could affect the company near term. Indeed, MO is trading at 21 times earnings, which is significantly higher than its 5-year average price/earnings ratio (17.1) and the industry's current P/E (19.5).

After acknowledging Altria's "large dividend (4.2%), stable cash flow, and very investor friendly management," Greg went on to say: "But just because a company is a generally excellent investment, does not mean that it is a good idea to buy the stock at whatever price the market is currently offering."

My thesis here is not that everybody should rush out and buy Altria. I'm just saying MO is that rare investment that is almost never a truly bad purchase. For investors - and I'm talking about investors, not traders - who are dedicated to long-term performance and/or income growth, MO tends to handsomely

This article was written by

Mike Nadel profile picture
15.14K Followers
"Do you know the only thing that gives me pleasure? It's to see my dividends coming in." - John D. RockefellerWell, a FEW other things give me pleasure, but I get where he was coming from.+++I manage two real-money portfolios at DividendsAndIncome.com:++ Income Builder Portfolio: https://dividendsandincome.com/income-builder-portfolio/++ Growth & Income Portfolio: https://dividendsandincome.com/mike-nadels-grand-twins-college-fund/

Disclosure: I am/we are long MO, PM, KHC. 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.

Recommended For You

Comments (284)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.