1. Altria Group, Inc. (NYSE:MO)
Number of Hedge Fund Holders: 38
Dividend Yield as of May 28: 8.62%
Altria Group, Inc. (NYSE:MO) ranks first on our list of the best dividend stocks to buy now. The Virginia-based tobacco company has raised its dividends for 54 consecutive years, with its current quarterly payout of $0.98 per share. The stock has a dividend yield of 8.62%, as of May 28. In the first quarter of 2024, the company reported a strong cash position, returning $1.7 billion to shareholders through dividends.
Altria Group, Inc. (NYSE:MO)’s performance has remained close to that of the broader market this year so far, returning 11.23%. In the last 5 years or so, the stock has underperformed the broader market by a wide margin. However, due to its strong dividend history and impressive dividend yield, investors are loyal to the stock. The stock’s forward P/E ratio currently comes in at 9.16, compared with 21.01 for the broader market, which shows that MO is undervalued relative to the broader market. Despite having strong credentials, the stock could be impacted by the declining volume of cigarettes. That said, Andvari Associates has given a positive outlook on Altria Group, Inc. (NYSE:MO) in its first quarter 2024 investor letter:
“Our second example of a high-yielding security is the stock of Altria Group, Inc. (NYSE:MO). Before we get into the details of why we started a position in Altria, a brief history is in order. The company was formerly known as Philip Morris before rebranding to Altria in 2003. Cynically, the rebranding was to minimize the negative attention from its tobacco business. However, the company also owned Kraft Foods and Miller Brewing, so it was logical to reflect its status as a conglomerate. Since rebranding, Altria has slowly “de-conglomerated”. It spun out Kraft in 2007. It spun out Philip Morris International in 2008. In 2021, it sold its Ste. Michelle Wine Estates business. Finally, last month Altria announced it is selling part of its 10% ownership in Anheuser-Busch InBev (BUD)
Andvari has followed Altria since we began our investment career. Profitability is extraordinary and the business requires minimal capital expenditures. Despite the volume of cigarettes having steadily declined—a great thing for our population health—Altria has still managed to grow revenues and profits with regular price increases…” (Click here to read the full text)
We also agree with the firm, as the company’s rebranding and evolving business models have benefitted it over the years. Altria Group, Inc. (NYSE:MO) spun out Philip Morris International Inc. (NYSE:PM) in 2008 and since then, the stock has returned over 106%.
Insider Monkey’s database of Q1 2024 indicated that 38 hedge funds owned stakes in Altria Group, Inc. (NYSE:MO), compared with 42 in the previous quarter. These stakes are collectively valued at over $823.3 million. Among these hedge funds, Harris Associates was the company’s leading stakeholder in Q1.
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Disclosure: None.