Altria Group Inc. (NYSE:MO) Offers a High Yield Supported by Strong Profitability

For investors looking for steady income, a methodical selection process is important. One useful method is to look for companies that provide a good dividend now and also have the financial soundness to maintain and possibly increase those payments in the future. This method usually centers on important fundamental scores: a strong result for dividend quality, along with satisfactory scores for profitability and financial condition. This pairing helps find businesses that produce enough cash to support their distributions and have balance sheets strong enough to handle economic challenges without putting shareholder returns at risk.

ALTRIA GROUP INC (NYSE:MO) appears as a candidate from this kind of selection method. The tobacco company, recognized for brands such as Marlboro and Copenhagen, represents a standard example for portfolios focused on income, receiving a 7 out of 10 on the ChartMill Dividend Rating. A more detailed examination of its fundamental report shows the particular attributes and factors that shape its appeal for dividend investors.

A Strong Dividend Case

The most direct appeal for income investors is Altria’s large yield. Presently at 7.19%, it is much higher than both the industry average of 3.46% and the wider S&P 500 average of about 2.00%. This large yield comes directly from the company’s dedication to giving cash back to shareholders. Apart from the amount of the payment, Altria has a history of dependability, having paid and not reduced its dividend for more than ten years. This record of steady payments is a key selection standard, as it shows management’s focus on shareholder returns across different market periods.

• Large Yield: 7.19% compared to 2.00% for the S&P 500.
• Payment History: More than 10 years of continuous and non-decreasing dividend payments.
• Dividend Increase: A small but consistent 5-year annualized increase rate of 4.03%.

The Basis: Profitability and Condition

A large dividend yield by itself can be a concern if not supported by a solid business. This is where the selection’s other filters for satisfactory profitability and condition show their value. Altria’s profitability is outstanding, getting a ChartMill Profitability Rating of 9. The company works with industry-best margins, including a 52.01% operating margin and a 37.78% profit margin, which are better than 100% of its tobacco industry competitors. This solid profitability is what finances the dividend, creating the significant earnings and cash flow needed for large distributions.

The financial condition rating, at a satisfactory score of 5, shows a varied but acceptable situation. Positively, Altria’s solvency is sound, with a very good Altman-Z score showing little short-term bankruptcy concern and an acceptable debt-to-free-cash-flow ratio. However, the selection properly notes a point of attention about liquidity, since the company’s current and quick ratios are below 1.0. For an established, cash-producing business like Altria, this is frequently a planned decision to use capital effectively, but it is still an item for investors to watch. The overall condition score verifies the company is not in trouble, which matches the selection aim of steering clear of firms where the dividend could be in immediate danger from balance sheet problems.

Valuation and Growth Setting

Altria’s valuation seems good, scoring an 8 on the ChartMill Valuation Rating. Its P/E ratio of 10.65 and forward P/E of 10.03 are low compared to both its industry and the general market. This valuation accounts for the major difficulties the company encounters, mainly the long-term ongoing decrease in cigarette smoking. The fundamental report supports this, giving a low Growth Rating of 3, with revenue trends that are level to slightly down. For a dividend investor, this highlights a key idea: Altria is not a growth investment. The reason to invest depends completely on its capacity to keep turning its stable, profitable activities into high cash returns for shareholders.

Is It Suitable for Your Portfolio?

Altria Group illustrates a distinct kind of dividend investment. It is very good at providing a large current yield supported by excellent profitability and a long payment history, important features looked for in a dividend-centered method. The satisfactory condition rating implies the balance sheet, while having some liquidity constraints, is not an obvious warning for a company of its type. The clear compromise is the absence of growth, which is expected for a mature industry with challenges.

For an investor whose main objective is large, consistent income, and who acknowledges the industry-specific risks, MO makes a strong example. It shows how an organized selection can find companies that match a particular income-focused plan, distinguishing those with maintainable payments from those where a large yield might be misleading.

Interested in examining other stocks that meet similar dividend, profitability, and condition filters? You can use the "Best Dividend Stocks" selection tool yourself here to see the complete list of candidates.

Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation, or an offer to buy or sell any security. Investing involves risk, including the potential loss of principal. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions. The analysis is based on data provided and may not be complete or up-to-date.