By Ian Salisbury

Altria stock has plenty of problems. But it also boasts a stable 7% yield -- and a payout that big can cover a lot of blemishes.

Altria, America's leading cigarette manufacturer, isn't anyone's idea of an ESG (environmental, social, and governance) stock. As if to wink at the very idea, the maker of Marlboro and Parliament-brand cigarettes, also owns an 8% stake in brewer Anheuser-Busch InBev and 41% of cannabis company Cronos.

Americans continue to smoke fewer cigarettes each year. The share of adults that smoke has declined to less than 12% today from 15% in 2015, according to the American Lung Association. That decline isn't going to reverse, and has taken a toll on Altria's shares, which trade at $58 today -- almost exactly where they were a decade ago.

But for investors who are more interested in payouts than growth (or health), the stock still looks plenty attractive. Wall Street analysts forecast earnings per share growth of 5% to 6% in 2025 and 2026, according to FactSet.

While Wall Street analysts see 2026 sales as flat or slightly down, per-share earnings should benefit from buybacks. In October, Altria said it spent more than $700 million on buybacks since the start of the year and that its board had increased the buyback program, which expires next December, to $2 billion from $1 billion.

Altria has also been working on new products to make up for lost cigarette revenue. This fall, the company launched On! PLUS nicotine pouches in North Carolina, Texas, and Florida. Pending Food and Drug Administration approval, Altria could soon start selling the product nationwide.

"We are particularly attracted to the consistency of the growth at Altria." wrote Stifel analyst Matthew Smith, who rates the company a buy, in late October. "The company balances earnings growth and investments to support its smoke-free ambitions."

Add to Altria's stable profit growth a 7.3% dividend yield, and it isn't hard to see why the stock looks attractive. The payout rate is the highest in the S&P 500 after Ford Motor, and looks fairly solid.

Altria isn't always included in lists of dividend aristocrats -- companies with decadeslong histories of making and raising payouts. But if you count its previous life as part of Philip Morris, it has been a consistent payer for more than 50 years. (Philip Morris was renamed Altria in 2003, and then in 2008 Altria spun off Philip Morris International.)

Altria generates about $3 billion in cash per quarter, while the dividend costs just $1.7 billion, according to FactSet. Another $500 million to $600 million goes toward debt and the buybacks, but that should leave plenty of room for error.

In a note Friday, Bespoke Investment Group said that, while Altria's share price gains have lagged behind the market over the past two decades, but if you factor in reinvested dividends, Altria handily comes out ahead, returning 1,300% compared with 730% for the broad market.

"Whatever you think of tobacco stocks and their impact on the health of the population, investing in them over the last 20 years has been anything but putting your money up in smoke," the firm wrote.

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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December 07, 2025 04:00 ET (09:00 GMT)

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