Chris Lange
8 min read
Quick Read
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Altria (MO) and British American Tobacco (BTI) fund dividends yielding about 5.5% or more through price increases and fast-growing nicotine pouches despite shrinking cigarette volumes.
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Altria’s 61st dividend increase in 57 years makes it a Dividend King, with earnings covering the payout and leverage near 2x.
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BAT trades at a cheaper valuation with faster smokeless growth, but US holders absorb currency swings and litigation risk in every quarterly check.
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Cigarette volumes keep shrinking, but shareholder payouts keep growing. Altria (NYSE:MO) and British American Tobacco (NYSE:BTI) both fund rising dividends with pricing power and fast-growing nicotine pouches, and at current prices each pays a forward yield of about 5.5% or better. That sits below the 6% ultra-high-yield line, but both still deliver healthy income from large, established businesses. The question for income investors is whether price increases and smoke-free products can keep paying for those dividends while the core business declines.
Altria
Altria pays $1.11 per share each quarter, an annualized $4.44. With the stock at $78.65, that works out to a forward yield of about 5.65%. Shares are up 43.02% year to date, so new buyers lock in a lower yield than shareholders who bought in January. Even so, new buyers still collect a forward yield above 5%.
Dividend Safety: Covered by Earnings, Backed by Decades of Raises
Full-year adjusted diluted EPS guidance was raised to $5.66 to $5.74, representing 4.5% to 6.0% growth. The $4.44 annual dividend uses about 77% to 78% of that range. That is a high payout ratio, but it is normal for a mature business that has little need for heavy reinvestment.
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