Altria (MO) Rewards Shareholders with 8.3% Dividend Hike - Analyst Blog

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The board of cigarette maker Altria Group, Inc. ( MO ) has announced a quarterly dividend hike of 8.3% to 52 cents per share. The new dividend will bepayable on Oct 10, 2014 to shareholders as of Sep 15. The new raise brings the annualized dividend rate to $2.08 per share and a dividend yield of 4.9% based on Altria's closing price of $42.58 on Aug 21, 2014.  Last year, the company increased its dividend by 9.1%.

Altria regularly returns value to its shareholders. Since the spin off of Philip Morris International Inc. ( PM ) in 2008, Altria increased its dividend every year. Moreover, the company has increased its dividend 48 times in the last 45 years. The company has a dividend payout ratio target of around 80% of its adjusted earnings per share.  

Apart from the dividend hike, the company also regularly repurchases shares. During the second quarter of 2014, Altria repurchased approximately 3.3 million shares for approximately $132 million. Altria also announced that it will enhance its share buyback plan by $700 million to $1 billion in a year from the current annual buyback plan of $300 million i.


The recent dividend hike and enhanced share buyback program reflects the company's strong cash position.

In Jul 2014 Altria reported its second-quarter earnings of 65 cents per share in line with the Zacks Consensus Estimate. The results, however, exceeded the prior-year quarter's results by 4.8%, backed by strong performance of the core tobacco business and leading premium brands

Altria Group, like its peers Lorillard Inc. ( LO ) and Reynolds American Inc. ( RAI ), is diversifying its product portfolio due to volume declines in cigarette industry. Smokeless products and e-cigarettes are the key product categories in which these companies are focusing now.

Altria has a Zacks Rank #3 (Hold).


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ALTRIA GROUP (MO): Free Stock Analysis Report

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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 The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: MO , PM , RAI , LO

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