Can Altria Raise Dividend Indefinitely?
Some companies are unmatched on the rate at which they pay out their dividends. Former DJIA component Altria Group, Inc. (NYSE: MO) definitely falls into that category, as do many tobacco sector peers. Today came the announcement that it is increasing its quarterly dividend by over 6% to $0.34 per share of common stock per quarter. The prior quarterly dividend rate was $0.32 per quarter. At an annualized rate of $1.36 per share and with shares at $18.15, this generates a yield right at 7.5% per year. The risk-free yield of the comparable Treasury is about 0.44% and the average yield of all S&P 500 stocks is roughly 1.88%. What we are curious about is how long through time Altria can keep paying dividend rates of this magnitude. For starters, Altria has a history of juicing up its dividends. Even during the woes of its major legal challenges in the late 1990’s, the company kept paying out a massive dividend rate. If you take analyst earnings expectations from Thomson Reuters, then there
