Altria Group (NASDAQ:MO) stock is currently trading at $46 but has had a 5 year high price of ~$80. We believe a rebound in the price should be expected, and this view is shared by the majority of Wall Street Analysts. 100% of the research analysts surveyed by Bloomberg recommended Altria stock as either a “Buy” or “Hold”, with multiple analysts targeting a 12 month price of ~$60. We believe this stock could be a winner for your portfolio for both income return and price appreciation.
Altria Group is an American conglomerate and one of the world’s largest producers and marketers of tobacco, food, and beverage products. It is the parent company of key Philip Morris brands such as Marlboro and also has key stakes in newer smoke-free products such as JUUL and IQOS.
Here are the reasons why we like the stock:
Altria has a long history of paying dividends and rewarding their shareholders, which makes their company a strong income stock. Their latest dividend yield is 7.7% and ranks as one of the highest in the US. See our Top 20 US dividend yield stocks here. If the stock outperforms, you will obtain superior Total Returns due to 1) Income Return from the stable and consistent dividend payout to shareholders, and 2) Price Return from any increase in the stock price.
Income stocks play an important part in your portfolio, as these stocks will reliably pay a dividend and a source of income to you, even if there is a down market or the company ends up with average performance. This characteristic makes it a stock favourite for large institutional money managers such as Blackrock, Charles Schwab, and Vanguard.
Altria has significant stakes in two of the most popular products in the growing alternative smoking market – JUUL and IQOS. JUUL is an electronic cigarette device and IQOS is a non-burn cigarette product, both providing consumers with a nicotine fix but with less health implications when compared to the traditional tobacco products.
This market has seen exponential growth in recent years. According to Euromonitor International, the E-cigarette market has a global market value of ~$45 billion, and the number of vapers globally has doubled in the last 5 years and has reached 80 million users. This market is showing no sign of slowing growth and is still just a fraction of the total addressable market for all smoking products.
Overall, we believe Altria is in a strong position to benefit from shifting product tastes in the tobacco market in the coming years, and will also continue to provide strong income in the form of dividends in the meantime. Altria stock could provide the perfect combination of steady dividend returns and upside price potential.