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Altria's Double Threat: 5.8% Dividend Yield And Low Beta
Posted February 3, 2012
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By Todd Johnson
Altria (MO) continues to shine in the tobacco industry. Altria is the highest yielding tobacco stock in the below tobacco peer group. A 5.8% yield is a terrific yield based upon sub 4% 30 year Treasury Bond rates. In this article I focus upon Altria's quarter and the rationale to own this stock in today's economic environment.
Overview:
The Altria Group consists of four companies: 1) PhilipMorrisUSA (major cigarette and cigar brands including Marlboro and Benson & Hedges); 2) US Smokeless Tobacco Company (smokeless tobacco brands including industry-leaders Copenhangen and Skoal); 3) Ste. Michelle Wine Estates (vineyards in Washington, Oregon and California, wine brands such as Chateau Ste. Michelle and Stag's Leap); and 4) Philip Morris Capital Corporation which is a leasing company focused on airplanes, power plants and real estate.
In addition, Altria holds a sizable 27.1% stake in SABMiller, a leading brewer with a major presence in all major continents (Miller, Miller Lite, Coors beer brands in the U.S.).
Business Strategy:
Altria focuses on adult consumers with its portfolio of cigarettes, tobacco, wine and brews. It also has an arm focused on the asset leasing business. Over the past century, Altria has grown through truly synergistic acquisitions that leverage its adult marketing and product distribution expertise. Its corporate mission rest on four key pillars: investing in leadership, aligning with society, satisfying adult consumers and creating substantial value for shareholders.
One major risk that overhangs Altria's earnings is the impact of lawsuits related to its cigarette and tobacco products. As a result, Altria actively promotes the health risks of cigarettes, cigars and tobacco, its primary revenue drivers. That said, Altria contributes significantly to government revenue through excise taxes, which exceeded $7 billion in 2011 alone. READ FULL ARTICLE HERE
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