2024-04-17 09:46:52 ET
Summary
- Altria Group currently has a dividend yield of 9.55%, which is above its historical average and among the highest levels in a decade.
- Its valuation ratios (e.g., P/E and P/cash) also indicate extraordinary discounts.
- Usually, these signs point to unsustainable dividends and/or terminally ill business fundamentally.
- But our conclusion is that neither scenario is likely and thus consider the stock a good contrarian investment opportunity.
MO is yielding 9.55% now
Altria Group ( MO ) is currently undervalued by a large margin, as you can tell from the charts below. The chart shows its dividend yield compared to its historical average and its price-to-operation cash flow (“CFO”) ratio compared to its historical average. In terms of dividend yield. Its current yield, as shown in the top panel of the chart, is about 9.43% and 9.55% on an FWD basis as of this writing (BTW, it is a dividend champion). It is not only far above the historical mean (7.79%) but also among the highest levels in a decade. In terms of P/CFO, it is trading at 7.9x only, compared to its past 10-year average of 10.2x and also among the lowest level in 10 years....
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Altria: Can't Argue With Its 10% Dividend Yield