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Altria Is The Ultimate 8% Yielding Dividend Aristocrat For What's Coming Next

May 04, 2023 7:30 AM ETAltria Group, Inc. (MO)BTI, BTAFF, PM, CRON30 Comments


  • Altria Group, Inc.'s recent earnings showed large declines in volumes, triggered partially by California's new flavored-nicotine ban.
  • Management is reiterating its 2023 guidance and providing new 5-year guidance based on its comprehensive smoke-free future plans.
  • Altria plans to steadily cut debt, and rapidly grow its reduced-risk product portfolio, hitting 28% sales from reduced-risk products, or RRPs, by 2028.
  • Management has instituted an even more shareholder-friendly dividend policy calling for 4% to 6% EPS growth in the next five years.
  • Altria Group is 20% conservatively undervalued with 33% upside to fair value, and could deliver 83% total returns in 3 years, and 166% in 6 years. Long term, management is guiding for 11.9% to 13.9% annual total returns and analysts expect 13.4%. Altria Group went up 2% during the 2011 debt ceiling crisis when stocks fell 20%. It's the perfect 8% yielding aristocrat for whatever is coming next for the economy and stock market.
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bank vault from which wads of dollars come out.


This article was published on Dividend Kings on Tuesday, May 2nd.


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This article was written by

Dividend Sensei profile picture

Dividend Sensei (Adam Galas) is an Army veteran and stock analyst with 20+ years of market experience.

He is a founding author of the investing group The Dividend Kings which focuses on helping investors safeguard and grow their money in all market conditions through the highest-quality dividend investments. Dividend Sensei and the team of analysts (Brad Thomas, Justin Law, Nicholas Ward, Chuck Carnevale, and Sebastian Wolf) help members invest more intelligently in dividend stocks. Features include: 13 model portfolios, buy ideas, company research reports, and a thriving chat community for readers looking to learn how to invest more intelligently in dividend stocks. Learn more.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. 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.

I own $4,000 worth of MO via ETFs.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (30)

Why don’t they distribute BUD shares to MO holders. Let them decide what to do?
Martin Fjeldhoj profile picture
Great article, thank you. Glad you see the updated dividend guidance as a strengthening of past policy - I agree, even though the new guidance wasn’t well-received.
Adam, thanks for the update. The detailed analysis allows each investor to determine whether or not it fits into their own personal portfolio plan based on risk, their own macro view, ethics, and allocations. As prudent, I will do my own due diligence and compare to the alternataive investments to see if it warrants further investigation. DK is a great resource for screening and information.
Catmanrog profile picture
Sensei ! Is it just me or are you REALLY saying MO is not growing to your dreams and replaced in your Zeus portfolio with PM ? You have written extensively in THIS article of MO “A recession-resistant low, volatility dividend king that went up 2% in the 2011 crisis is as ideal a stock as you can buy for the coming debt ceiling showdown that's not a bond ETF”.

Are you writing to inform your followers of MO or just getting more income via articles and Dividend Kings? So NO position now in MO (except thru SCHD)
for you ? A bit of “Pied Piper” ? I guess we’re now getting the “REAL” you, and we should seriously start doing our own due diligence, even on MO which one of my largest payers and one I’ve held in retirement for 25 years.

Let us know about this changing horses in mid-stream. Your followers would like to know. Rog
@Catmanrog It is not just you. It appears that Sensei's real life investments do not appear to match up very well to the information he shares in his articles. To me, he writes like a salesman for specific stocks yet decides to invest primarily in stock funds. I bought a ton of BTI stock a while back based on his recommendation which has done very poorly to date. My BTI annual dividends have declined substantially since purchase and the value of my BTI investment based on stock price has declined over $60,000. I have purchased 93 individual stocks since 2007 and made a profit on 89 of them. Up to now, the most I ever lost on a stock investment was less than $5,000. My BTI investment is the worst investment I ever made. At 76 years old, I have limited time to recover this loss.
Nicotine! Multiple ways to deliver this drug.

Politicians and bureaucrats are ignorant corrupt clueless fools.

Long MO and BTI
Big Mo is bigger than all other stocks! Mark my words! Big Mo will never dies!
Great Work!! and with no mention of the BUD holding. Should BUD move to $80 over the next 24-36 months(expected) I believe you could juice those anticipated annual returns on MO to %13 -%16
Turk Malloy profile picture
I think this is MOs last hurrah. If their 5 year plan does not hit their marks, they will be in some trouble.

I am a shareholder and I am fine giving them the chance. But in 2-3 years if we are looking at a stock in the 20s - they will be the melting ice cube as predicted.
I wouldn't worry about California's actions. They are a criminal state. That's just the politicians. The homeless and lower income people will smoke what they want. The voters are mainly clueless.
Dividend Ambassador profile picture
I agree with a lot of this article. I still think MO is likely a very good investment at the current valuation. But that said, BTI is in a better position and DS, haven’t you moved your own investments from MO to BTI?
Dividend Sensei profile picture

Yes, BTI is better, and I sold MO at a modest profit to buy BTI in the recent crash.

Because BTI is yields more (at the time) is growing faster, is a more diversified company, and is executing better on RRPs.
Dividend Ambassador profile picture
@Dividend Sensei I sold some MO a while back to swap for BTI as well.
is not mo part of zeus ?
Dividend Sensei profile picture

It was replaced by PM.

The industry leader in RRPs.

And the industry growth leader, growing almost 2X as fast as MO.
BA Man profile picture
Charlie Munger advises - “The big money is not in the buying and selling ... but in the waiting”.
14 words to reinforce the idea put forth in this article of establishing a position, or continuing to hold what I already have. So, I’ll continue to let MO send me a pile of cash every 91 days, and using at least a portion of it to buy a few more shares.
Long MO for the duration.
@BA Man Long tobacco for many years. Mostly take the divs as cash. It wasn't that many years ago Marlboro had a 50% market share, now its 42%. That is a notable trend.
Too US focused. BTI and PM are better options
Dividend Sensei profile picture
@Institutional Working No More

MO spun out PM in 2007 for the exact purpose to give investors the choice of owning the US business and the international business.

It's a 100% US company by design.

At the time legacy legal liabilities were the reason for the spin-off.
Poor choice for too many reasons to mention.
@Stephenbakerlaw Please give us a few. I own MO and PM, but I'm on the fence with MO and I would like your input. If you are in the law field especially an attorney, I've guessing you are person of many words whether you're prosecuting or defending. Thanks. "-)
@djlongjay If interested, you can read my prior comments on many SA articles that have been written on MO and other Big Tobacco companies.
@Stephenbakerlaw Absoluety. Always looking for opinions and then I'll do my due diligence.
In your portfolio that you posted 3 weeks ago you held no shares of MO at all. Have you now invested in it?
Dividend Sensei profile picture
@BS Spotter

"I own $4,000 worth of MO via ETFs."

MO is in SCHD.

I didn't buy it I just disclosed the stake in the ETF.

Most author assumes that the disclosure is only for stocks you own directly.

Imagine you own the Vanguard total world index.

Which is nearly 10,000 companies.

If you talk about 20 companies in an article, and own VT, do you disclose that you own all the companies?

Because this article is about a single company, I took the time to look up my ETF ownership in Morningstar.
@Dividend Sensei
So a $100,000 stake in SCHD, but no shares otherwise in MO despite the title “ultimate.”
@BS Spotter
My bad, maybe it’s $400,000 in SCHD to have $4000 MO then that I do not think is how your portfolio disclosure looked 3 weeks ago either.
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