BUDFF - Altria: The Good The Bad And The Ugly

2024-02-05 00:09:36 ET

Summary

• Altria Group is a tobacco company facing challenges due to societal consciousness and the growing trend towards healthier lifestyles.
• The company offers an attractive 9.48% dividend yield and maintains a secure payout ratio below 80% with some growth.
• Altria runs a highly efficient business model and has a relatively cheap valuation, yet the growth forward is expected to decelerate.
• The shrinking customer base, unsuccessful acquisitions, and lack of innovation are expected to haunt the company over the long term.
• I recommend retirees to hold already purchased shares, while total return seekers may want to look elsewhere, as there are no catalysts to drive capital appreciation.

Altria Group, Inc. ( MO ) is a well-known big tobacco juggernaut with a rich history and iconic brands that have stood the test of time for over two centuries.

Operating in an industry often criticized for its environmental and health impacts, Altria's primary business is tobacco products. However, the company also owns a 9% stake in the global beer conglomerate Anheuser-Busch ( BUD ), which is worth around $12.5 billion.

The increasing societal consciousness and a trend towards healthier lifestyles, especially among the younger generation avoiding smoking and alcohol, could present challenges for Altria in the long run. Failing to attract users at a young age may result in a lack of customers in the future....

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