Tobacco maker Altria Group's stock price and dividend payout
are rising despite challenges posed by smoking-related lawsuits
and a decline in cigarette sales.
Altria Group 's (
) most recent dividend increase was in August, when it boosted
its quarterly payout by 9% to 48 cents a share. It was Altria's
47th dividend increase in the past 44 years.
The annual dividend yield is close to 5% at the current share
price, far above the S&P 500 average of 1.87% and the highest
among the three tobacco stocks in the IBD Income Investor screen.
The others areLorillard (
) andReynolds American (
Altria shares this year have risen nearly twice as much as the
Altria makes Marlboro and Virginia Slims cigarettes, Black
& Mild cigars and smokeless tobacco under the Copenhagen and
Skoal brand names.
The company has managed to increase earnings steadily despite
worldwide anti-smoking campaigns and high litigation fees. It's
done so in part by raising prices, cutting costs and introducing
smokeless-tobacco products such as electronic cigarettes.
Quarterly profit growth has been remarkably stable, ranging
from 4% to 14% since the start of 2010, with the exception of one
quarter in which earnings were flat.
As a result, Altria has a five-year Earnings Stability Factor
of 1 on a scale of zero (most stable) to 99 (most volatile).
In the first quarter, Altria reported a profit of 57 cents a
share, up 6% from a year earlier. Sales were flat at $5.52
billion, as higher sales of smokeless products offset a decline
in cigarette sales. Profit for the full year is expected to rise
8% to $2.57 per share, followed by a 7% increase in 2015.
Annual pretax margin was a robust 29.7% last year, the fourth
straight increase and another factor in the company's ability to
continue increasing its dividend.