We believe that Altria is a great dividend play. An undervalued stock does not necessarily mean that only its share price is trading below its intrinsic value. Other forms of investor return could also contribute to a stock’s potential undervaluation, particularly dividends. Altria is one such company that has consistently generated returns to shareholders, mainly through dividend payouts, and also share buybacks. To illustrate an example of this, Altria’s price returns for three, five and 10 years were –8.1%, –20.3% and 13.3% respectively. With dividends reinvested, the returns for the same periods were 16.8%, 18.1% and 107.7% respectively.
Recommended for investors seeking passive income through dividends
New York-listed Altria Group is the holding company of various wholly-owned subsidiaries that manufacture and sell cigarettes, cigars and various tobacco products. Brands such as Phillip Morris USA, John Middleton Co and Helix Innovations operate the main cigarettes, cigar and tobacco business of the company. Altria also has a significant stake in Cronos Group, which is a global cannabinoid company and Juul Labs, which is a manufacturer of e-vapour products. Altria reports two operating segments, which are smokeable products and oral tobacco products. The company currently trades at US$40.25 ($54.08) per share, which is around US$71 billion in market capitalisation.
