The board of cigarette maker
Altria Group, Inc.
) 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. (
) 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. (
) and Reynolds American Inc. (
), 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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