Altria (MO) is a dividend aristocrat that has raised its dividend for 47 consecutive years and is expected to announce its next dividend hike in the next two months. As most of its shareholders hold the stock for its generous and reliable dividend, it is only natural that they look forward to the upcoming dividend hike. In this article, I will analyze what raise the shareholders should expect.
First of all, while Altria is a perfectly managed company, it is facing some secular headwinds. To be sure, the percent of US population that smokes is in a continuous decline. Moreover, an increasing number of US states has significantly raised the tax on cigarettes in order to reduce their budget deficits. For instance, California raised the tax on a pack of cigarette from $0.87 to $2.87 this year. Given the deteriorating budgets of most states and the appeal of tax raises on cigarettes, the situation will only get worse for tobacco producers.
