Can Altria Group Stock Still Generate Returns for You?

The Dividend Story That Keeps Investors Coming Back

When it comes to income-generating investments, few stocks rival what Altria Group (NYSE: MO) brings to the table. Currently sporting a dividend yield above 7%, the company has demonstrated unwavering commitment to shareholder payouts—raising its dividend annually for 56 consecutive years, totaling 60 increases. For yield-focused investors, these metrics remain hard to ignore.

The tobacco giant was historically paired with Philip Morris International and delivered remarkable performance: a 20% annual average return over 50 years when dividends were reinvested. That track record was built on high-margin products and a relentless focus on returning cash to shareholders.

Recent Performance: Dividends Mask Underlying Challenges

However, recent years tell a different story when you examine price appreciation alone. Over the past one, three, and five-year periods, Altria’s stock price gains have lagged behind the S&P 500 index. The company faces structural headwinds: U.S. cigarette consumption continues its downward trajectory, and previous attempts to diversify have created significant losses.

Most notably, Altria’s $12.8 billion investment in vaping leader Juul evaporated when regulators effectively shut down the business. Similarly, its position in cannabis producer Cronos Group deteriorated significantly. These missteps created substantial shareholder value destruction during a period when the broad market thrived.

That said, when total returns are factored in—combining both price appreciation and dividend payments—Altria has managed to keep pace with or occasionally exceed the S&P 500 over one-year and five-year horizons, demonstrating the power of that 7.2% yield to offset price weakness.

The Pivot Strategy: Next-Generation Products Hold the Key

Management is betting on a strategic turnaround centered on next-generation nicotine delivery systems. After the Juul collapse, Altria acquired Njoy, a vaporizer brand aimed at smokers seeking alternatives. More significantly, On!, its oral nicotine pouch product, represents a direct challenge to Philip Morris International’s popular Zyn offering.

These newer products represent Altria’s path to reigniting growth. As traditional cigarette volumes erode, premiumization—raising prices on combustible products—combined with market share gains in less-regulated categories could stabilize earnings. The company’s current valuation reflects modest expectations: a price-to-earnings ratio of just 11.3 suggests the market isn’t pricing in meaningful success from these transition efforts.

The Investment Case: Attractive if Conditions Align

For conservative investors prioritizing income, Altria remains compelling. The combination of a reliable dividend, decade-long payment history, and depressed valuation creates an asymmetric risk-reward dynamic. If On! and Njoy gain meaningful traction with consumers, the stock could deliver both yield returns and capital appreciation.

Conversely, should these new products fail to gain adoption and cigarette volume declines accelerate faster than price increases can offset, current valuations could prove vulnerable. The company’s cash generation ability remains intact, but future growth depends almost entirely on successful commercialization of products that face intense competition and evolving regulatory landscapes.

Investors must weigh whether Altria’s 7.2% dividend adequately compensates for execution risks and secular industry headwinds. The answer depends on individual risk tolerance and income needs.