Altria: A Smoldering Investment

by

The year of our Lord two-thousand and twenty-two, and the beginnings of twenty-three, were unkind to those who sought solace in the predictable yields of dividend stocks. Interest rates, like capricious landlords, demanded ever higher rents, driving sensible folk towards the sterile comfort of government bonds and certificates of deposit. But ah, the fickleness of the market! As the Federal Reserve, in a series of pronouncements that resembled nothing so much as a bureaucratic incantation, lowered its benchmark rate six times in succession, a peculiar stirring occurred. Stocks, once slumped and despondent, began to twitch, then rise, like Lazarus from his slumber.

Amongst these resurrected companies, one name surfaced with a particularly stubborn tenacity: Altria (MO +3.40%), the foremost purveyor of tobacco in this, our American domain. Over the past two years, its stock has rallied with a vigor that would shame a Cossack, exceeding a fifty percent ascent while the broader S&P 500 managed a mere forty. One is compelled to ask: what dark alchemy fuels this improbable resurgence? And, more importantly, can it endure? Let us, then, examine this curious case, and consider whether a modest ten thousand dollars—or perhaps a sum more substantial—might find a temporary haven within its smoldering embrace.

A Peculiar Prosperity

Altria, once known as Philip Morris USA—a name that conjures images of gentlemen in smoking jackets and ladies with delicate cigarette holders—cast off its overseas concerns in two-thousand and eight, birthing Philip Morris International (PM +1.07%). As a domestic entity, Altria appears, at first glance, to be a perilous venture. The number of Americans indulging in the habit of smoking has dwindled to levels not seen in six decades, a testament to public health campaigns and the inherent absurdity of self-destruction.

Yet, the Marlboro brand—a name synonymous with rugged individualism and, let us be honest, a certain degree of reckless abandon—still commands over forty percent of the American retail cigarette market. And Altria, ever resourceful, has mastered the art of extracting value from a diminishing pool of customers. It raises prices with the precision of a seasoned pickpocket, trims costs with the ruthlessness of a tax collector, and repurchases its shares with the calculated indifference of a gambler. This, my friends, is not merely business; it is a performance, a carefully orchestrated dance on the precipice of obsolescence.

Furthermore, Altria is diversifying its portfolio, venturing into the realm of smokeless products – e-cigarettes, nicotine pouches, and that most peculiar of concoctions, snus. It is an attempt, one suspects, to escape the inevitable decline of the cigarette, to transform itself from a purveyor of vice into a… well, a purveyor of slightly less harmful vices. The acquisition of NJOY, completed in two-thousand and twenty-three, is intended to accelerate this metamorphosis. One can only imagine the boardroom meetings, the frantic calculations, the desperate attempts to stay ahead of the tide.

Analysts, those oracles of the financial world, predict a three percent increase in Altria’s adjusted earnings per share in two-thousand and twenty-six, and a four percent increase in two-thousand and twenty-seven. It generates a considerable amount of cash, enough to cover its forward dividend yield of 7.1 percent. And it has raised its payout sixty times over the past fifty-six years – a testament to its unwavering commitment to returning capital to shareholders, or perhaps a clever distraction from its dwindling core business.

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An Evergreen Investment? A Question for the Ages

To call Altria an “evergreen” investment would be… premature. Its core cigarette business is, undeniably, shrinking. It may soon reach a point where it can no longer raise prices or cut costs to offset its declining shipments. And it may struggle to expand its smokeless portfolio rapidly enough to counter that pressure. One can envision a future where Altria, once a titan of industry, is reduced to a mere shadow of its former self, a cautionary tale whispered in the corridors of Wall Street.

Nevertheless, I believe Altria will remain a reliable source of income for a few more years. It possesses a remarkable ability to squeeze profits from its existing customers, a talent honed over decades of relentless marketing and shrewd pricing strategies. Its low valuation and high yield should also limit its downside during the next market crash. It is not an exciting stock, to be sure. It lacks the glamour of a tech startup or the promise of a revolutionary new product. But it will generate stable income in an unstable market. And in these uncertain times, my friends, stability is a rare and precious commodity indeed.

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2026-01-30 23:55