ALTRIA GROUP INC (NYSE:MO) - A High-Yield Dividend Stock Worth Considering

ALTRIA GROUP INC (NYSE:MO) was identified as a strong dividend candidate by our Best Dividend stock screener. The company offers an attractive yield while maintaining solid profitability and reasonable financial health. Below, we examine why MO stands out for income-focused investors.

Dividend Strength

• High Yield: MO currently offers a dividend yield of 6.86%, significantly above the industry average of 3.92% and the S&P500 average of 2.38%.
• Reliable Track Record: The company has paid dividends for at least 10 years without reductions, demonstrating commitment to shareholders.
• Modest Growth: While dividend growth has been modest at 4.03% annually, the consistency adds stability for income investors.

Profitability

MO earns a 9 out of 10 in ChartMill’s Profitability Rating, reflecting strong financial performance:

• High Margins: Operating margin stands at 49.62%, well above industry peers.
• Strong Returns: Return on invested capital (ROIC) is 36.74%, indicating efficient use of capital.
• Consistent Earnings: MO has been profitable for the past five years, with positive cash flow each year.

Financial Health

With a 5 out of 10 Health Rating, MO has some strengths but also areas to monitor:

• Solvency: A healthy Altman-Z score of 4.49 suggests low bankruptcy risk.
• Debt Management: The debt-to-FCF ratio of 3.08 is manageable, outperforming most industry peers.
• Liquidity Concerns: Current and quick ratios are below industry averages, which could pose short-term challenges.

Valuation

MO appears attractively valued:

• Low P/E Ratio: At 11.37, it trades below both the industry and S&P500 averages.
• Reasonable Forward P/E: The forward P/E of 10.42 suggests continued affordability.

For a deeper look, review the full fundamental report on MO.

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Disclaimer

This is not investing advice! The article highlights observations at the time of writing, but investors should conduct their own research before making decisions.