Core Insights - The article emphasizes the importance of dividend-focused investing, highlighting that dividends have historically contributed significantly to total returns in the stock market [4]. Company Analysis Altria - Altria Group Inc. is a major player in the tobacco industry, offering a 6.12% dividend yield and primarily selling cigarettes under the Marlboro brand [5]. - The company sold 35 million shares of Anheuser-Busch InBev, representing 18% of its holdings, and announced a $2.4 billion stock repurchase plan [6]. - Goldman Sachs has rated Altria as a Buy with a target price of $72 [6]. Clorox - Clorox Co. provides a reliable 4.04% dividend yield and is known for its consumer and professional cleaning products [7]. - The company operates through four segments, including Health and Wellness and Household products [8]. - Jefferies has rated Clorox as a Buy with a target price of $151 [9]. Kimberly-Clark - Kimberly-Clark Corp. has a 4.66% dividend yield and has raised its dividend for 53 consecutive years [10]. - The company announced an acquisition of Kenvue Inc. for $48.7 billion, expected to close in the second half of 2026 [14]. - Argus has rated Kimberly-Clark as a Buy with a target price of $120 [14]. PepsiCo - PepsiCo, Inc. reported solid third-quarter earnings with a 3.36% dividend yield and is trading at 18 times forward earnings [15]. - Activist investor Elliott Investment Management has taken a $4 billion stake in PepsiCo, aiming to unlock value through strategic changes [16]. - UBS has rated PepsiCo as a Buy with a target price of $190 [17]. Verizon - Verizon Communications Inc. offers a 5.62% dividend yield and trades at 9.13 times its estimated 2026 earnings [18]. - The company operates in two segments, providing a range of communication services to consumers and businesses [19][20]. - TD Cowen has rated Verizon as a Buy with a target price of $51 [20].

Core Viewpoint - Altria Group Inc offers a high dividend yield of 6.36%, raising concerns about the sustainability of this yield given its financial metrics [2][7]. Dividend and Earnings - The company pays a quarterly dividend of $1.06 per share, totaling $7.20 annually, and has consistently raised its dividend for over two decades [3]. - Altria's earnings payout ratio exceeds 100%, with reported earnings of $4.06 per share against dividend payments of $4.16 per share, indicating potential risks for income investors [4][7]. Cash Flow Analysis - In 2025, Altria generated $9.07 billion in free cash flow, covering $6.96 billion in dividends, resulting in a free cash flow payout ratio of approximately 77% [5][7]. - The coverage ratio over the past five years has ranged from 1.22x to 1.34x, suggesting a comfortable position above critical thresholds [5]. Balance Sheet Concerns - Altria has a total debt of $25.7 billion and negative shareholder equity of -$3.5 billion, a situation that has persisted for five consecutive years [10]. - The debt-to-assets ratio is 73.4%, and current liabilities exceed current assets, raising concerns about financial stability [10]. Management Insights - CEO Billy Gifford highlighted the commitment to significant cash returns to shareholders and projected adjusted EPS for 2026 to be between $5.56 and $5.72, indicating growth of 2.5% to 5.5% [13]. - The company has expanded its share buyback program to $2 billion, which, while reassuring, does not mitigate the existing leverage and earnings pressure [13].

Group 1 - Altria Group Inc is known for its Marlboro cigarettes and smokeless tobacco products [1]

Core Insights - Dividend stocks are favored by investors, particularly Boomers and older Gen X, due to their ability to provide steady passive income and total return potential [1][2] - Total return includes interest, capital gains, dividends, and distributions, exemplified by a stock purchased at $20 with a 3% dividend yielding a total return of 13% when the price rises to $22 [1] - Anticipation of two rate cuts in 2026 suggests that investors should consider high-yield dividend stocks now [1] Dividend Stocks Overview - Since 1926, dividends have contributed approximately 32% to the S&P 500's total return, with capital appreciation accounting for 68% [4] - A study indicates that dividend stocks delivered an annualized return of 9.18% from 1973 to 2023, significantly outperforming non-payers at 3.95% [4] Featured Companies - **Altria Group Inc.**: Offers a 7.30% dividend yield and is a major player in the tobacco industry, selling primarily through wholesalers [5][6] - **Apple Hospitality REIT Inc.**: Owns a large portfolio of upscale hotels, providing an 8.10% monthly dividend [9][10] - **Energy Transfer L.P.**: A leading midstream energy company with a 7.97% distribution, owning over 114,000 miles of pipelines [11][12] - **Healthpeak Properties Inc.**: Focuses on healthcare real estate with a 7.56% dividend, managing properties across various healthcare segments [17][18] - **Verizon Communications Inc.**: A telecommunications giant with a 6.71% dividend, showing strong financial metrics and consistent dividend growth over 20 years [19][20]

Altria Is Losing Ground in the Smokeless Tobacco Race. The Stock Is Falling. - Barron'sSkip to Main ContentThis copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com.# Altria Is Losing Ground in the Smokeless Tobacco Race. The Stock Falls After Earnings.By [Nate Wolf]ShareResize---R ...

The maker of Marlboro cigarettes reports weaker-than-expected quarterly earnings. ...

Virginia-based Altria Group, Inc. (MO) manufactures and sells smokeable and oral tobacco products. Valued at $104.1 billion by market cap, the company offers cigarettes primarily under the Marlboro brand, large cigars and pipe tobacco under the Black & Mild brand, moist smokeless tobacco and snus products under the Copenhagen, Skoal, Red Seal, and Husky brands, and more. Shares of this leading tobacco company have outperformed the broader market over the past year. MO has gained 19% over this time frame, ...

Core Viewpoint - Investing in dividend stocks provides a reliable income stream that can be reinvested or used for expenses, allowing investors to hold shares without selling them [1] Group 1: Consumer Spending and Dividend Stocks - Consumer spending is crucial for the economy, and high-quality dividend stocks can be found in consumer-facing companies with strong brands [2] - Examples of such companies include Costco Wholesale, The Coca-Cola Company, and Altria Group, each representing different investment styles [2] Group 2: Costco Wholesale - Costco Wholesale is a leading retailer with a loyal customer base, known for its membership model and bulk merchandise sales [3] - The company has a market capitalization of $431 billion, with a current stock price of $970.66 and a dividend yield of 0.52% [4][5] - Costco has paid and raised its dividend for 20 consecutive years, spending only a quarter of its earnings on dividends, indicating potential for future growth [5] Group 3: The Coca-Cola Company - Coca-Cola is a global beverage leader with a strong track record of dividend growth, having increased its dividend for 62 consecutive years [6] - The company has a market capitalization of $316 billion, with a current stock price of $73.55 and a dividend yield of 2.77% [7][8] - Coca-Cola's growth is supported by a rising global population and brand recognition, allowing for continued expansion in a fragmented beverage market [8] Group 4: Altria Group - Altria Group, known for its Marlboro cigarettes, has maintained profitability despite declining cigarette sales due to its pricing power [9] - The company has a market capitalization of $107 billion, with a current stock price of $63.62 and a dividend yield of 6.54% [10] - Altria has achieved 54 consecutive annual dividend increases, providing a substantial yield despite low single-digit earnings growth [10]

Industry Overview - The consumer staples sector underperformed significantly in 2025 but is expected to see a more favorable environment in 2026 due to easing sector-specific pressures and potential fiscal stimulus boosting demand [1] - The sector has a 70-percentage-point performance gap relative to tech stocks over the past three years, indicating a contrarian opportunity for long-term investors [1] - The Consumer Staples exchange-traded fund (NYSEArca: XLP) gained 7.5% in just six trading days to start 2026, marking the strongest short-term run since 2022 [1] Investment Opportunities - The S&P 500 has produced double-digit returns over the past three years, but a shift towards safer consumer staples stocks is advisable due to potential market corrections [2] - Consumer staples stocks not only offer solid upside potential but also provide significant, dependable dividends, making them attractive for conservative growth and income investors [2] Notable Companies - Altria Group Inc. (NYSE: MO) offers a compelling entry point for value investors with a 7.30% dividend yield and focuses on smoke-free products [5] - Hormel Foods Corp. (NYSE: HRL) has a reliable 5.05% dividend yield and is restructuring its portfolio to improve performance after a 25% decline in 2025 [9] - Kimberly-Clark Corp. (NYSE: KMB) has raised its dividend for 53 consecutive years, currently yielding 5.04%, and is acquiring Kenvue Inc. in a $48.7 billion deal [13][15] - PepsiCo Inc. (NYSE: PEP) reported solid earnings and has a 3.81% dividend yield, with a potential upside of over 50% due to strategic changes proposed by activist investor Elliott Investment Management [19][20] - Procter & Gamble Co. (NYSE: PG) has raised dividends for 70 straight years, with a current yield of 2.82%, focusing on branded consumer packaged goods [22][25]

Core Viewpoint - Altria Group, Inc. is identified as a potentially mispriced opportunity, trading at a modest discount to its intrinsic value while generating substantial cash flow and returning capital to shareholders [1] Business Overview - Altria Group is one of the largest tobacco companies in the U.S., primarily known for its Marlboro cigarette brand, with a leading market share in combustible cigarettes and exposure to smokeless tobacco and oral nicotine products [2] Business Model - The company's business model is characterized by pricing power, brand strength, and predictably declining volumes, with historical price increases offsetting volume declines, resulting in stable operating cash flow [3] Valuation Metrics - Altria's intrinsic value to price (IV/P) ratio is 1.10, indicating that the intrinsic value is approximately 10% above the current share price, suggesting a moderate discount to long-term earning power [5] - The Acquirer's Multiple stands at 9.7, indicating that an acquirer could theoretically recoup the full enterprise value in under a decade of operating earnings, which is reasonable for a company with durable brands [6] Revenue & Profitability - The trailing twelve-month revenue is approximately US$ 20.2 billion, with an operating income of roughly US$ 12.0 billion, resulting in an operating margin near 60%, reflecting strong pricing power and low capital intensity [7] - Net income attributable to common shareholders is around US$ 8.8 billion, with diluted EPS at approximately US$ 5.24, showcasing the company's ability to convert sales into distributable cash [7] Balance Sheet Structure - Altria's balance sheet reflects a mature, shareholder-return-oriented business, with negative equity primarily due to decades of capital returns rather than operational distress; the debt load is manageable due to stable cash flows [8][10] Cash Flow & Capital Allocation - Altria's free cash flow for the trailing twelve months is approximately US$ 9.2 billion, with a free cash flow yield of about 7.5-8% on enterprise value [9] - The majority of free cash flow is returned to shareholders through dividends, with approximately US$ 6.9 billion paid in cash dividends over the trailing twelve months, reinforcing its position as a high-yielding large-cap equity [12] Undervaluation Factors - The market applies a heavy discount to traditional tobacco businesses, but Altria's ability to sustain high margins, strong free cash flow, and disciplined capital returns despite declining unit volumes is underappreciated [13][14] Conclusion - With an IV/P of 1.10, an Acquirer's Multiple of 9.7, and nearly US$ 9.2 billion in trailing free cash flow, Altria Group is viewed as a moderately undervalued, cash-flow-driven value opportunity, particularly for income-focused and value-oriented investors [15][16]