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Altria's Incredibly Low Valuation Makes It A Great Investment

May 24, 2023 11:39 AM ETAltria Group, Inc. (MO)54 Comments


  • Altria Group has a dividend yield of more than 8% that it can comfortably afford with its earnings.
  • The company is working to rapidly expand its smokeless portfolio, which will form a strong basis of its future volumes, with higher margins.
  • We expect the company will continue growing its EPS and dividends to increase shareholder returns but would like to see increased diversification.
  • We're currently running a sale for our private investing group, The Retirement Forum, where members get access to portfolios, market alerts, real-time chat, and more. Learn More »

Marlboro cigarettes empty packs


Altria Group, Inc. (NYSE:MO) is one of the largest tobacco companies in the world. Despite consistent warnings about cigarettes, the company has managed to consistently improve its assets and cash flow. As we'll see throughout this article, the company's profits and

This article was written by

The Value Portfolio profile picture

The Value Portfolio specializes in building retirement portfolios and utilizes a fact-based research strategy to identify investments. This includes extensive readings of 10Ks, analyst commentary, market reports, and investor presentations. He invests real money in the stocks he recommends.

He is the leader of the investing group The Retirement Forum with features including: model portfolios, macro overviews, in-depth company analysis and retirement planning information. Learn more.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of MO either through stock ownership, options, or other derivatives. 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.

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 (54)

@The Value Portfolio interesting. today Barclays issued sell on Altria with price target of $37 !!!!!!!!!!!!!!!!! I am with you on this but really Barclays at $37. where are these guys coming from? maybe why mo down a buck today
I’m in Kauai and many of the vapers use the Elfbar vape. It’s huge. Can njoy compete with Chinese owned Elfbar?
Dividend Ambassador profile picture
I agree more or less. But BTI’s valuation is even lower and BTI is MUCH further along on NGP’s. I say, new money to invest in nicotine delivery corporations has to go to BTI right now.
Bought a few more shares on Friday May 26th. I expect a nice price bump in July with quarter results and NJOY purchase.
bengalesq profile picture
The market seems very well settled on the value of this issue. Aren't u better off for the time being eliminating the risk and getting 5-6% on cash instead?
Mo is the best.
MyPrivilegeIsShowing profile picture
I’m afraid the ‘melting ice cube’ theory is right
@MyPrivilegeIsShowing seems right for all dividend stocks. Value is out tech is in.
Ulrich Eckert profile picture
My thinking is that If you add cigarettes ,vaping and smokeless tobacco: you still have 20 percent of the US population using nicotine regulary. Plus a few Million cigar ,pipe smokers.

Nicotine is addictive and helps people in stress. I smoked For over 10 years and switched to nicotine pouches. I had three cigarettes the whole last month. I live in Germany.

Altria has to win in the alternative product space. The valuation is ok because Altria is a market leader in the US. But they have to win in alternatives for long term success.
Thanks for good article.
DRIPed for 4 years now collecting dividends to pay for retirement and bought after JUUL and covid dips, so even though I missed all the prior 20 years of spinoffs, thanks to cheap entry points, dividends will exceed cost after 9-10 years around 2027-2028. See no reason to sell, except to take profits occasionally like when it hit 57 recently and buy more shares later at lower price. One of my better investments.
Long MO.
AlphaElephant profile picture
I like MO but I like BTI more
Steven Moreno profile picture
Nothing last forever but determining when the end will be is a different story.
Dicktater143 profile picture
@Steven Moreno you could say that about any business . Big tobacco will become big nicotine and money will be made like always .
Steven Moreno profile picture
@Dicktater143 Not if the Government is successful in forcing tobacco companies to lowering nicotine levels.
Gwyther1949 profile picture
@Steven Moreno That proposed rule is only for cigarettes.
Ulrich Eckert profile picture
I have a few shares of Mo. The question is if Mo can make their nicotine pouches and njoy a commercial success.

Mo has scale in distribution and knows how to handle regulators.

I will not make it a big position like i have in Bti. I think Mo is not the no-brainer like 10 years ago because new reduced risk products could steal them their customers.

They know they have to move. But Juul was a total disaster.
Peter Jaworowski profile picture
@Ulrich Eckert I think it’s safe to say that on! Nicotine pouches are a commercial success. Sure they are #2 and so far behind ZYN they’ll likely never catch up to it, but it should be a solid #2 product in a growing market going forward.
EdwardGLott profile picture
MO and PM are paying for all of my housing expenses. The reliable income is w win for me.
15 year shareholder.

Disappointing. Terrible capital allocation on m&a.

Poor overall returns. Continue decline in smokers and elasticity is getting worse.

Hopefully future is better.
@stevemcclearn "15 year shareholder. Disappointing."

You're disappointed...? Why? You've pulled in TONS of Dividends & more than doubled your original investment! What's not to like about that?
buckiowa profile picture
@stevemcclearn plus the BUD disaster!!
@buckiowa "plus the BUD disaster!!"

I certainly don't fault MO for what BUD has done... and it's my guess that this "disaster" will blow over. I still drink Stella & it's one of their products.
Just the Millionaire next door profile picture
"The largest risk to our thesis is Altria's lack of diversification". They tried that with Juul and Cronos. Was a disaster. Now BUD is having issues.
The Dividend Collectuh profile picture
I believe in the NJOY acquisition. Hopefully it pays dividends 😉📈💰
@The Dividend Collectuh
Agreed. Good technology. They now also own all the tech from JUUL, so MO can use to develop their own nonJUUL vaping products.
suchenwi profile picture
I hold 118 $MO shares (not exactly much), but plan to add more on month's end, when liquidity streams in. Goldman Sachs also listed $MO as possibly recession-resistant.
8% gross yield is less than 6% net under German tax laws, below my current benchmark of 7.7% (to beat inflation). But still, given the chance of recession, maybe a better bet than all those high-yield BDCs into which I recently invested... Diversification FTW!
vvw profile picture
So, in five years, an "almost" guaranteed 10% dividend, yes, I'm glad I own this stock! Chaliedon'tsurf brought up something about declining smoking rates. Yes, it's is declining. I'v tried to consider this over time and come to this conclusion. There will ALWAYS be some smokers. It won't go to zero in the population. I'm not sure where it levels out. But it won't be zero. Wonder what everyone else thinks?
Very Thirsty For Dividends profile picture

That 10.7% yield is based on MO's stock price remaining essentially where it is today, at $45 per share, while the dividend increases 5% per year.
vvw profile picture
@very_thirsty_for_income It would be our yield on cost, no matter the current stock price.
suchenwi profile picture
@vvw I think both "yield on cost" (for a Hold decision) and current yield (TTM or FWD, for a Buy decision) have their merits.
In addition, I sometimes compute price appreciation ("gain") / current yield.. i.e. the number of yearly dividends that the sale profit covers. If over 10, I tend to Sell :)
Greenhorn Investor profile picture
Thank you for the article
Yes I’m glad I kept mo
No doubt about it. Mo is the best income producer.
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