Altria Group, Inc. (NYSE:MO) ranks among the top picks for a retirement portfolio. Altria Group, Inc. (NYSE:MO) and KT&G Corporation, a South Korean tobacco company, signed a non-binding memorandum of understanding on September 23 to work together on novel oral nicotine products, non-nicotine products, and conventional tobacco operating efficiency. The agreement includes plans to grow nicotine pouch products across the globe, including the possible extension of Altria’s on! and on! PLUS brands into selec ...

Core Viewpoint - British American Tobacco (BAT) is emerging from a challenging decade and is positioned to potentially outperform the market moving forward, despite the inherent risks associated with tobacco investments [1][2][3]. Company Performance - BAT has faced significant challenges over the past decade, including a tumultuous market environment and the consequences of a costly merger with Reynolds American, which resulted in a $31.5 billion non-cash write-down on its U.S. cigarette brands in late 2023 [3][10]. - The stock has shown a 43% increase over the past year, although it remains down 25% from a decade ago, indicating a potential shift in market sentiment towards a more favorable outlook for the company [11]. Revenue and Growth - BAT's new category products, including electronic cigarettes and heated tobacco, have seen organic, currency-neutral sales growth of 8.9% in 2024, contributing to 17.5% of total revenue [4]. - Management anticipates annualized currency-neutral revenue growth of 3% to 5% starting in 2026, which, while modest, represents a recovery path from previous declines [5]. Dividend and Cash Flow - The company offers a nearly 7% dividend yield, providing attractive short-term returns, especially during periods of market volatility [2][6]. - In 2024, BAT generated £7.9 billion in free cash flow and paid out £5.2 billion in dividends, resulting in a payout ratio of 66%, indicating a healthy cash flow position [8]. Valuation and Market Position - BAT's stock valuation has improved, currently trading at under 10 times 2025 earnings estimates, which is a significant recovery from a low of under 8 times earnings early last year [12]. - The company’s strategic focus on transitioning to smoke-free products positions it favorably against competitors, although it still trails Philip Morris International in this area [4][10].