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Altria Has Strong Consistent Cash Flow Potential

May 02, 2022 8:35 AM ETAltria Group, Inc. (MO)50 Comments


  • Altria is suffering from inflation, hurting the tobacco business after several years of a decline slowdown.
  • The company has seen its earnings and ability to drive shareholder rewards grow consistently.
  • Additionally, the company is expanding volumes in non-cigarette tobacco and other sin products.
  • We expect this combination will enable Altria to provide increasing and growing shareholder rewards.
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Philip Morris Changes Name To Altria

Mario Tama/Getty Images News

Altria (NYSE:MO) is one of the largest tobacco companies and general "sin" stocks in the world with a market capitalization hovering around $100 billion. The company has an almost 7% dividend yield and remains one of the highest returning stocks

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Comments (50)

How exactly will Altria reap benefits from the impending legalization of marihuana in the US? Solely through its interest in Cronos or will it benefit in other, more direct ways?
@Jeff Milligan Cronos will be fully purchased once marijuana is legalized and it will be in a direct manner. Juul pods will most likely be filled with thc along with vape pens
I wish these two companies would get back together. PM probably long term has a much better growth profile in so many other countries.
IMO PMs purchase of Swedish Match(SM) is kind of a big deal. SM selling Zyn in the US means they already have a distribution network and a relationship with retail stores in the US which will make it easier for PM to establish a distribution network for IQOS in the US if they sever the relationship with MO.

This means PM would get all the money from IQOS in the US and they would not have to share anything with MO. I expect IQOS would cannibalize cigarette sales of MO and BTI and would only be upside for PM since they have no cigarette sales in the US.

I expect things could get nasty between MO and PM in regard to IQOS when IQOS becomes available in the US.

When IQOS comes back to the US I expect it will be Iluma.


"Aug. 17, 2021-- Philip Morris International Inc. (PMI) (NYSE: PM) today announced the launch of IQOS ILUMA, the latest and most innovative addition to their growing portfolio of smoke-free products for adults who would otherwise continue to smoke or use nicotine products. Today, this range of better and satisfying alternatives to cigarettes includes multiple generations of the IQOS tobacco-heating system, the No. 1 heated tobacco product in the world.1 Uniquely, the new IQOS ILUMA becomes the brand’s first tobacco-heating system to introduce induction-heating technology, which utilizes no blade and requires no cleaning."
Oil Can profile picture
Something going on with $MO this morning.

More menthol ban blather? The $PM buyout of Swedish Match?

Gwyther1949 profile picture
@Oil Can PM buyout...signals they are coming to America.
@Gwyther1949 but does it really change anything. Zyn has a majority of market share in USA already. Maybe PM increases that share. I doubt it Though. IQOS will always stay a joint venture as Altria(old PM) has as much right to the tech as they “jointly“ developed it for 15 years. PM cannot get into combustibles in the UsA. Maybe Veev shows up eventually, but Juul/Vuse/ FDA will be hard to break into. Help me see the real harm to Altria. If anything this gets regulatory notice of Zyn and it’s popularity and brings further restrictions.
Hermann Balck profile picture
@Oil Can I suspect market thinks the risk of PM bypassing MO on everything except cigs in the USA.
Gwyther1949 profile picture
Philip Morris in talks to buy Swedish Match in a deal valued at $15 billion, the WSJ reports. Wondered why the stock tanked all of sudden today.



@Gwyther1949 Wish MO had bought it!
Gwyther1949 profile picture
@Valuestocks007 Probably too many similar products to get merger clearance from FTC.
@Gwyther1949 i guess i just wish they had a bigger international business... that will grow the next two decades...
I used PM sale at 104 and change to buy MO at 49 and change. 2.05 MO for each PM or thereabouts. At 56.57 now about 7 points up with 2.05x shares and the dividend is a whole lot larger. Looking at some earnings projections, PM will be lucky if they increase dividend by 12 cents and my 2.05 MO shares should get 20 cents times 2.05 is 41 cents, that is a much larger increase than PM. PM will suffer at least 7% loss of sales in Russia/Ukraine. This was done in IRA accounts and our PM shares in our taxable account were traded for ABBV in 2020 for 1.05 ABBV for each PM. At this writing both trades are for the good in both price and dividends.
@spiro3 I think you should have stuck with PM.
dlevine007 profile picture
As long as the government doesn’t do any more to attack the business MO should be fine. I did sell some recently in an inherited IRA but it seems to me like MO is holding up in this market. If the overall market keeps dropping and MO Is flat to up at some point I may use it as a source of funds to buy other stocks that have been destroyed. But I’m not there yet.
@dlevine007 interesting thought!
Appreciated the comments farther below - hold and sleep well. Vices will never die and MO is a legitimate business. The MO house seems to be in better order than a few years ago, understatement. Perhaps a bit more upside for MO, otherwise thinking dividend yield toward 5% to 6% is appropriate.
@jnbsan007 They have stated I believe an 80% payout.. so it will keep going up my guess. I would be happy to see 70% some debt pay down and more buybacks personally. But I am just a person who always prefers less debt in my life or the companies we invest in!
Murad Shawar profile picture
Used to own sold for growth stock going to rebuy it eventually when I sell some PayPal at 250-270 in 24 months from now I dont think MO will move much and if it does oh well . MO AND PM are my two tobaco plays sold them to buy PayPal.
hugh74jones profile picture
MO has turned in a spectacular performance since start of year. I sought to buy on declines to add to my position of a couple years now, but there has not been a 10% decline for a long while. Accordingly, and as an options trader, I have numerous uncovered put sale positions in MO, and at these option "expiration dates", I collect a nice sale premium in lieu of a dividend. Of course, if the MO price ever falls below option "strike price", then you can acquire added MO shares, at a lower price ----- so, a "win -win" situation, IF you have the funds to cover any assigned shares. Check with your advisor if interested.
Bring on Marijuana. MO will run it.
I sold my PM in IRA's at 104 and bought MO at 2.05 MO for each PM. I was looking at PM dividend and they will have trouble raising it more than 12 cents. It looks like MO will do 20 cents at low end earnings. So that equals 41 cent PM. Projections forward favor MO over PM on earnings. It's was simple, by 2025 PM might earn 7.12 and MO at 6.16, if you figure 2 shares MO for each PM it's really 12.32 a share equalized vs PM 7.12
Marrk profile picture
Doubled my position at $43.

Long MO
arok79 profile picture
Another set it and forget it stock. Buy it on dips and sleep like a baby at night. Long long term owner of MO and continue to add on any and all dips. Cheers 🍻
@arok79 how long???
arok79 profile picture
@Valuestocks007 since the dot.com bubble.
Murad Shawar profile picture
@arok79 If you dont mind me asking is it more than 1% of your portfolio.
I looked at the JUUL fiasco as a gift and over the last several years added substantially to my MO position in the high 30s through the 40s. With the current price in the mid 50s and the stock approximately 11% over its 200 day moving average I quit adding to MO in my taxable account for the time being.

That said I am not selling any MO and will continue dripping in my ROTH IRA.
Great take. I feel like on this one like you do if I can get 6-8% growth with MO and reinvest my dividends until I need to the income I can do pretty well and one day turn the income on and use it in retirement! Thanks
SleepyInSeattle profile picture
Well presented article. Thanks and look forward to more.
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