Against a backdrop of persistent inflation, macroeconomic uncertainty and equity volatility, investors lost confidence in the stock market. What they need now is to protect their returns. Therefore, dividend stocks that give regular returns on their investments have become popular. Let’s take a closer look at tobacco giant Altria Group (NYSE: MO), which offers a huge dividend yield of 8.64%.
MO: Solid track record of dividend growth
Based in Virginia, USA, Altria Group, Inc. is a tobacco company that manufactures and sells cigarettes, smokeless products and wine in the United States.
Although the world is moving away from cigarettes, Altria enjoys strong customer loyalty and continues to have strong pricing power. It has also made strategic efforts to diversify its portfolio by adding smoke-free products. The company foresees strong growth potential in its oral tobacco, electronic vapor and heated tobacco categories.
With a current market cap of $75 billion, the company has outperformed the benchmark. Altria Group shares have lost 14.9% over the past year against the S&P, which is down 17.7%.
However, the regular flow of quarterly reports dividends which imply an annualized return of 8.64% relieves investors.
Notably, the company has consistently increased its dividends with an average annual dividend growth rate of over 8% over the past 10 years. Last month, the company increased its quarterly dividend by 4.4% to $0.94 per share (from $0.90 previously).
Moreover, its payout ratio of 77.53% means that dividends are well covered by its profits.
Is Altria a Buy, Sell or Hold?
According to TipRanks, analysts are cautiously bullish on the stock and have a moderate buy consensus rating, which is based on three buys, three holds and one sell. Altria Group’s average price forecast of $46.57 implies 12.30% upside potential.
Notably, MO stock has an excellent Smart score of a “perfect 10” on TipRanks. Additionally, the stock has a very positive signal from hedge fund managerswhich added 1.0 million shares in the last quarter.
Following in the footsteps of top hedge fund managers, retail investors are also bullish on MO stocks. TipRanks’ Stock Investors tool shows investors currently have a positive stance on Altria Groupwith 2.3% of investors on TipRanks increasing their exposure to MO stocks over the past 30 days.
Altria shares are trading at attractive levels and present a good buying opportunity. It is trading much lower than the 52-week highs of $57.05 seen just a few months ago.
What is reassuring is that its high dividend yield is supported by stable and regular free cash flow as well as a healthy balance sheet.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.