Altria Group's Share Price Rises Amid Ongoing Challenges

Altria Group sees nearly a 30% rise in stock price for 2024. Despite this, challenges loom, with 91% of profits reliant on declining smokeable products, making investors wary about future growth.

Date: 11-02-2025

AI Rating: 6

Earnings Overview
For the full year 2024, Altria Group recorded $11.8 billion in operating profits, with a staggering $10.8 billion (91%) coming from smokeable products. This reliance on traditional tobacco products raises concerns as cigarette consumption continues to decline in the U.S.

Dividend Stability
Altria maintains a healthy dividend payout ratio at 80% of earnings, which offers reassurance to dividend-seeking investors. The stock currently provides a generous yield of 7.7%, reflecting the market’s demand for higher yields due to the company’s slow growth prospects.

Potential Growth Challenges
Despite the company's efforts to diversify into next-generation products, recent setbacks have led Altria to retract its growth goals for smoke-free products. Management expressed frustrations over competitive pressures from illegal vape products, which could inhibit market share growth and affect long-term revenue.

Future Earnings Projections
Analysts predict Altria will achieve an average earnings growth of 3.5% per year over the next three to five years, aligning with historical dividend increases averaging around 4%. However, the potential for future declines in its smokeable product business poses concerns for sustained profitability.

The overall sentiment towards Altria indicates a cautious outlook for investors focused on total returns, while those relying on dividends may find some comfort in the current yield.

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