Could Altria's Dividend Continue to Grow?
For a long time, some of the best-performing stocks came from the tobacco industry as these companies were able to steadily raise prices on packs of cigarettes, fueling steady earnings and dividend growth even as fewer and fewer people smoked cigarettes.
But as we sit here in 2023, investors are doubting that these industry dynamics will continue. Competitive threats from reduced-risk products have added uncertainty (but also opportunity) for the tobacco giants. Altria Group (NYSE: MO) is one of these companies. The stock trades at a price-to-earnings ratio (P/E) well below the market average and sports a sky-high dividend yield of 8.5%, indicating that Wall Street doubts whether the U.S. seller of Marlboro cigarettes can continue to grow its dividend.
Altria management thinks otherwise. At its recent investor day, it set a goal of growing the stock's dividend at a mid-single-digit rate (meaning 4% to 6%) every year, which looks highly attractive considering its current yield of 8.5%. Can Altria's dividend continue to grow? Or is Wall Street right to doubt these goals? Let's investigate.
Source Fool.com
