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Dividend investors know that not all dividend stocks are created equal. The size of the dividend is just as important as the reliability of the payout, which is why dividend investors value consistency just as much as the payout itself. With that in mind, investors may want to pay attention to this “Dividend King” stock that just increased its payout by a solid 4%.
Altria (NASDAQ:MO) is one of America’s best-known tobacco companies. It manufactures and sells a full line of tobacco products, including traditional cigarettes, chewing tobacco, cigars and e-cigarettes. More importantly, Altria sells these products through legacy brands such as Skoal, Marlboro and Copenhagen, which have a customer base that goes back several generations.
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While traditional tobacco remains Altria’s most marketable product and accounts for the majority of its profits, the company is diversified. Altria’s asset portfolio includes a 10% stake in Anheuser-Busch InBev, 35% in JUUL e-cigarettes and 45% in cannabis company Cronos Group.
This diversification across tobacco products and the growing cannabis industry has put Altria in a strong position to pay consistent dividends to its investors and increase them regularly. Altria has increased its shareholder dividends for 54 consecutive years, making it one of the few stocks to earn the title of “Dividend King.”
The title “Dividend King” is reserved for stocks that have increased their dividends over the past 50 years. Earning that title is a testament to the longevity of the stock and the quality of its management. These stocks attract both institutional and independent investors for long-term holdings. Altria recently sweetened the pot for its investors with a significant dividend increase.
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Altria announced that it would raise its quarterly dividend by 4.1% per share. The announcement raises Altria’s dividend yield to 7.9% on the company’s August 21 share price of $51.81, which equates to a quarterly dividend of $1.02 per share. The increase marks Altria’s 59th in the past 55 years, and the company’s goal is to continue paying dividends in the “mid-single digits” through 2028.
While it is impossible to guarantee future performance, Altria’s track record is impressive. They deliver products with strong global appeal, and many of Altria’s family brands, such as Marlboro and Copenhagen, are instantly recognizable. Nevertheless, Altria stock is not without risks.
As global tobacco consumption declines, companies like Altria are faced with shrinking customer bases, with governments increasing regulation and taxation of tobacco products. Many states have enacted heavy tobacco taxes to discourage youth use, potentially hurting future profits and threatening Altria’s Dividend King status.
However, Altria has survived these regulatory challenges and multimillion-dollar tobacco settlements without losing its Dividend King status. The company is highly diversified, and if cannabis becomes legal, Altria is well-positioned to take advantage of that market. For these reasons, investors looking for a solid dividend stock may want to consider adding Altria to their portfolio.
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This article This “Dividend King” Stock Just Sweetened The Pot For Investors By Raising Its Dividend To Over 7% originally appeared on Benzinga.com
