Altria vs. Clorox: A Dividend Investor’s Dilemma

Right. So, the market. It’s…a lot. Honestly, it feels a bit like dating. You think you’ve found “the one” – a solid dividend stock, you know, dependable, mature – and then you realize it’s just…smoking. Figuratively, of course. Though, increasingly, it feels literal when I look at Altria. Units of Altria held: 50 (and dwindling). Hours spent researching: approximately 47. Number of times I’ve questioned all my life choices: uncountable.

Altria. It’s got this huge dividend yield, 6.9% at last count. Which, on paper, is fabulous. It’s the sort of number that makes you think, “Yes! Financial security! Early retirement! Maybe a small yacht!” But then you actually look at the company, and it’s like realizing that gorgeous guy at the party works as a professional mime. It’s…a warning sign. 89% of their sales come from nicotine. Cigarettes, specifically. And 97% of that is cigarettes. And 85% of that is Marlboro. It’s…a pyramid scheme of puffing, isn’t it? One brand, one habit, slowly…disappearing.

Their cigarette volumes are down. 10.6% this year. 10.2% last year. It’s a consistent decline, a slow, inexorable drift towards…well, irrelevance. They’ve been trying to offset it with price increases and stock buybacks, which is a bit like putting a plaster on a gaping wound. It looks like you’re doing something, but it doesn’t actually fix the problem. And new products? They haven’t really found anything to fill the gap. It’s a bit depressing, really. A signal of risk, as they say. A very large, smoky signal.

So, I started looking for alternatives. Something…cleaner. Something that doesn’t involve encouraging people to shorten their lives. And I landed on Clorox. Clorox! It sounds so…domestic. So…sensible. And it’s got a yield of 4.5%, which, while not as eye-catching as Altria’s, feels…safer. Like choosing a comfortable cardigan over a leather jumpsuit. During the pandemic, everyone went mad for Clorox. Cleaning products were flying off the shelves. It was a good time to be in the bleach business. But then…the world normalized. Demand dropped. Inflation happened. And then…a hacking event. Honestly, it sounds like a plot from a particularly stressful novel.

But here’s the thing. Clorox is actually turning things around. Gross margins are recovering. They were down to 33% at one point, which sounded…grim. Now they’re at 41.7%. It’s not a miracle, but it’s progress. And they’ve got this “sharp-shooter” business model, which sounds a bit aggressive, but basically means they focus on specific areas where they can really excel. Trash bags, salad dressing, kitty litter…the essentials of modern life, really. They’re even rolling out scented trash bags. Scented! It’s…inspired, in a slightly terrifying way.

They’ve also got a long history of innovation. It’s not flashy, but it’s consistent. They don’t try to be everything to everyone. They focus on what they do well, and they do it really, really well. They’re a leader in many consumer staples segments, and in some cases, they’re the only major branded competitor. Which, let’s be honest, is a pretty good position to be in. It’s like being the only coffee shop in a small town. You can charge what you want, and people will still come.

And the dividend? Clorox has increased its dividend annually for 48 consecutive years. 48! They’re only two years away from becoming a Dividend King. Which, let’s face it, is a pretty impressive title. It’s the sort of thing you can brag about at parties. “Yes,” you can say casually, “I invest in Dividend Kings.” It sounds much more sophisticated than, “I invested in a company that sells cigarettes.”

So, here’s my conclusion. Altria is…complicated. It’s a high-yield stock with a declining business. Clorox is a slightly lower-yield stock with a recovering business. Given the choice, I’m going with the one that doesn’t involve encouraging a harmful habit. Number of shares of Altria sold: 50. Number of shares of Clorox purchased: 50. Number of times I’ve checked my portfolio today: approximately 78. Will become a disciplined long-term investor: maybe. Probably not. But a girl can dream.

2026-01-23 04:13

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