Is Altria's 7.3% Yield Safe? This 1 Thing Matters Most in 2026

Core Insights - Altria Group has performed well in 2025, with a stock increase of approximately 10% since January, or 16% including dividends [1] - The company is recognized as a Dividend King, boasting a dividend yield of 7.3% at its recent share price, which is a significant attraction for investors [2][8] - The sustainability of Altria's dividend is a concern for shareholders as the company faces slow growth in sales due to a shrinking customer base [2][5] Financial Performance - Altria's core cigarette business is declining, leading to limited top-line growth, which has resulted in a discounted stock price and higher dividend yield [6] - The company has a solid financial foundation, regularly increasing cigarette prices to counteract declining sales volumes, and is expected to grow earnings by 3% annually over the next three to five years [7] - The dividend payout ratio is 82% of 2025 earnings estimates, and Altria holds a multibillion-dollar stake in Anheuser-Busch InBev, providing liquidity options if necessary [8] Industry Trends - The tobacco industry is gradually shifting from traditional cigarettes to smoke-free products, such as electronic vapes and heat-not-burn devices [10] - Competitors like Philip Morris International and British American Tobacco have successfully integrated next-generation products into their portfolios, with these products accounting for 41% and 18.2% of their net sales, respectively [11] - Altria still heavily relies on cigarettes and cigars, which made up over 88% of its net revenue in the third quarter, indicating a potential risk of losing market share if it does not adapt to industry changes [12]