Tobacco titan Altria presents the highest financial returns among its industry peers
In the world of tobacco stocks, Altria (NYSE: MO) is gearing up for a significant event in August 2025. The company, renowned for its consistent annual dividend hikes since 2009, is widely expected to announce another increase.
Several factors support this prediction. For starters, Altria's adjusted Earnings Per Share (EPS) rose 8.3% in Q2 2025 to $1.44, beating analyst expectations and prompting the company to raise its EPS guidance. This earnings growth strengthens the company's ability to make a more robust dividend payment.
The shift towards alternative tobacco products is another key factor. Growth in oral nicotine pouches and e-vapor products is offsetting declines in traditional cigarette sales, helping sustain profitability and cash flow to support dividends.
Altria's strong dividend history and high yield are also significant. The company currently offers a high yield of around 6.6% to 7%, making it an appealing choice for income-focused investors.
Financial discipline and share buybacks further enhance shareholder value, making a dividend raise feasible.
Positive market sentiment and an EPS guidance upgrade also encourage management to maintain or raise dividends to attract income investors.
While the exact percentage increase has not been publicly confirmed, analysts and investors expect Altria to announce a dividend increase in August 2025 that aligns with its earnings growth and cash flow strength. This will likely continue the company's pattern of steady, moderate dividend hikes rather than extremely large increases.
Conservative income-focused investors who want their income to grow slightly in excess of inflation should consider adding Altria to their portfolios at current levels. However, it's important to note that regulatory risk is a constant threat, with the FDA proposing limits to nicotine levels in January.
In the first half of 2025, Altria saw a decline in cigarette shipment volume by 11.9%. Yet, revenue from the oral tobacco segment, specifically on!, increased by 22.7%.
Altria is the most expensive stock on Price/Sales among the three tobacco companies compared, with a multiple more than double that of the cheapest one, Imperial. On dividend yield, Altria is the clear winner, with a yield of 6.6%, while British American and Imperial Brands have identical yields of 5.7%.
When it comes to the Price/Earnings ratio, things are a bit more even, with British American being the most expensive. Analysts on Wall Street expect Altria to grow its EPS by 4.14% annually over the next five years. The stock has been up 50% over the last year, with an average annual return of 8.5% over the past five years.
Despite the company's struggles with vaping, with the JUUL acquisition being a disaster and current struggles with NJOY, Altria has managed to maintain its position as a major tobacco company with the highest yield among all major tobacco companies in the U.S. and overseas. The Q2 2025 earnings report was well received by the market, with the stock up 5% since July 29.
In conclusion, while the precise dividend raise percentage may not be publicly confirmed yet, a dividend increase in August 2025 is anticipated based on solid earnings growth, expanding smokeless product sales, and a strong commitment to rewarding shareholders.
Investors looking for income-focused businesses may find Altria appealing, given its high dividend yield and expected increase. The finance sector may view Altria's strong earnings growth and cash flow as positive indicators for future investments.
