MO — Altria Group, Inc.
Price when we picked it (Aug 31, 2026)
$68.64
Target: $70.00 (+2%)
P/E Ratio
14.5
P/E Forward
11.7
Dividend
6.5%
Market Cap
$114.8B
EPS
$4.75
Consensus
Hold
What they do
Altria Group (Richmond, Virginia; ~5,900 employees; CEO Sal Mancuso since May 2026, 36 years at the company) sells tobacco and nicotine almost exclusively in the US — Marlboro's rights outside the US belong to Philip Morris International. Marlboro holds 39.5% of the entire US cigarette market (59.6% of the premium segment). The rest: Black & Mild cigars, Copenhagen and Skoal snuff, on! nicotine pouches (~120,000 stores, with 6/9mg versions FDA-authorized) and NJOY vapes — though the NJOY ACE has been banned from import since 2025 over a patent dispute with JUUL. Also: ~8% of Anheuser-Busch InBev, ~41% of Cronos (cannabis) and a joint venture with Japan Tobacco for heated tobacco (Ploom, under FDA review).
The model is counterintuitive: cigarette volume falls ~4–9% a year (on purpose — fewer people smoke) but Altria raises prices faster than volume falls, buys back shares and passes everything to the dividend. It has run this play for decades: 61 dividend increases in 57 years.
Why we like it
Three reasons.
- THE MOST PROVEN 6.5% ON THE MARKET: 61 dividend increases in 57 years (Dividend King), the latest a few weeks ago (+4.7% to $1.11 quarterly, $4.44 a year); the new policy promises mid-single-digit annual growth through 2028 and the payout (~78%) is within its plan. No other pick of ours pays like this with that track record.
- THE MODEL STILL WORKS: the quarter brought in $6.11 billion with volume −3.2% — the SOFTEST decline in quarters, helped by state crackdowns on illegal vapes — and adjusted earnings grew +2.8%; 2026 guidance of $5.61–5.72 (+3.5–5.5%). Price over volume, like 50 years ago.
- CHEAP WITH OPTIONAL CATALYSTS: 11.7x expected earnings with a $2 billion buyback active; the smoke-free portfolio (on! in 120,000 stores, Ploom with Japan Tobacco at the FDA) and the AB InBev (~8%) and Cronos stakes are value the price barely counts. We're buying ~11% below its high of the year after the Q2 punishment.
Key Risk
#1: the core business shrinks forever. Underlying cigarette volume falls ~4–9% a year (Marlboro shipped −7.4% in the quarter) and the thesis requires price to always outrun the decline — the day it doesn't, the model breaks. Others:
- down-trading: smokers are migrating to cheap brands — Marlboro lost 1.5 points of share in a year;
- the new stuff isn't taking off: NJOY ACE banned over JUUL patents (no return in 2026), and on! pouches LOST volume (−4.2%) against Zyn in the quarter;
- regulation: the menthol ban was withdrawn in 2025 but could return under another administration; the usual litigation;
- ~78% payout: little cushion if earnings stumble;
- zero international exposure: it's a 100% bet on the American smoker;
- Hold consensus with a ~$70 target — at today's price, Wall Street only expects the dividend. Here we're buying the income, not the growth.
This is educational and informational content, not financial advice. Always consult a qualified financial advisor before making investment decisions.
Vectorial Data picked MO on Aug 31, 2026 at $68.64.
Full Research
What it does. Altria Group (NYSE: MO; Richmond, Virginia; ~5,900 employees; CEO Sal Mancuso since May 14, 2026 — succeeding Billy Gifford; CFO Heather Newman) sells tobacco/nicotine almost only in the US (international Marlboro belongs to PMI). Marlboro: 39.5% of the total US cigarette market in Q2 (−1.5 pp year over year on migration to cheap brands; 59.6% of premium, stable). Smoke-free portfolio: on!/on! PLUS pouches (~120,000 stores; FDA authorized 6/9mg, 12mg pending), NJOY vapes (ACE banned from import/sale since March 31, 2025 by an ITC order won by JUUL — no return expected in 2026; only NJOY Daily sold), Black & Mild cigars, Copenhagen/Skoal snuff, and a JV with Japan Tobacco (Ploom heated tobacco, PMTA under FDA review). Stakes: ~8% of AB InBev, ~41% of Cronos. Ste. Michelle (wine) was sold in 2021.
Results (Q2 2026, July 30). Net revenues $6.11 billion (+0.1%); net of excise taxes $5.36 billion (+1.2%). Adjusted EPS $1.48 (+2.8%) — slightly below ~$1.50 consensus; the stock fell ~8%. Domestic cigarette volume −3.2% reported (~−4.5% inventory-adjusted) — moderating for a fourth straight stretch, helped by state crackdowns on illegal flavored vapes. Oral tobacco: shipments −8.5% reported (~−2% adjusted); on! −4.2% in the quarter (Zyn competition); H1 on! +5.1% (96.1 million cans). Pouches are now ~60% of the US oral category. 2026 guidance narrowed: adjusted EPS $5.61–5.72 (+3.5–5.5% on a $5.42 base).
Dividend and capital. Raised 4.7% in August 2026 to $1.11 quarterly → $4.44 a year: 61st increase in 57 years (Dividend King); ~6.5% yield. New policy: a 'progressive dividend' growing mid-single digits annually through 2028 (replacing the ~80% payout target; it now runs ~78%). Buybacks: $2 billion program (expires Dec 31, 2026; doubled from $1 billion in October 2025); H1: 5.3 million shares for $335 million; $665 million remaining. Dividends paid in the half: $3.6 billion.
Stock. $68.64 at the open (August 31, 2026); 52-week range $54.70–$77.06 (~11% below the high); market cap ~$114.8 billion; P/E 14.5x TTM / 11.7x forward. 2026: first-half rally on the illicit-vape crackdown and resilient volumes; −8% on Q2; recovery supported by the dividend hike. Hold consensus (4 buy / 7 hold / 2 sell); average target ~$70 (range $58–79).
Risks. (1) Secular decline: underlying volume −4–9% a year (Marlboro −7.4% in the quarter); price must always outrun the fall. (2) Down-trading to discount brands (discount shipments +67% per one analysis; Marlboro −1.5 pp share). (3) Smoke-free execution: NJOY ACE excluded (more ITC rulings between Sep-2026 and Jan-2027); on! losing momentum vs Zyn. (4) Regulation/litigation: menthol withdrawn Jan-21-2025 but could return; ongoing health and patent litigation. (5) ~78% payout with little cushion. (6) 100% US: no diversification against the American smoker's decline; illegal vapes still compete despite enforcement.
This is not financial advice. Consult a certified financial advisor.
The author may hold positions in the securities discussed.
Past performance does not guarantee future results.