We recently published a list of the 8 Most Profitable Dividend Stocks to Buy Now. In this article, we are going to take a look at where Altria Group Inc. (NYSE:MO) stands against other profitable dividend stocks.
When it comes to profits, dividend investing is the first thing that springs to mind. Dividends represent a portion of a company’s earnings paid out to its shareholders, and over the years, they’ve come to play a growing role in personal income, with their share increasing notably. According to a report by S&P Dow Jones Indices, dividends as a part of personal income has grown from 2.68% in Q4 1980 to 7.88% in Q2 2024, while net interest has fallen from 14.58% to 7.61% during the same timeframe. The report also mentioned that dividends made up more than one-third of the market’s total return from 1936 through 2024, with capital appreciation accounting for the other two-thirds.
With the market becoming turbulent today, investors are once again turning their attention to dividend stocks, which had largely been sidelined for the past two years. The last time dividend stocks had their moment was in 2022, but since then, they have been overshadowed by AI stocks. That said, dividend stocks are witnessing a renewed interest because of their stable characteristics. According to Jefferies, dividend-paying stocks can be a good choice in light of the Trump administration’s approach to tariffs. Desh Peramunetilleke, head of the quantitative strategy at Jefferies, emphasized that dividend stocks can make an impression during rough economic patches. His team also supported this idea, believing that dividend stocks would outperform this year, driven by high-quality yield stocks and defensive yield names. Peramunetilleke made the following comment on March 27 note:
“A study of past stagflation-like period shows that it is a headwind for equities, but dividend strategies tend to be more resilient. Since 2001, [bond proxies] and [high-quality yield] have outperformed the most during such periods in [the] U.S.”
Analysts like Peramunetilleke have noticed this renewed interest in dividends this year. The Dividend Aristocrat Index, which follows companies with at least a 25-year track record of dividend growth, has fallen by a little over 4% since the start of 2025, compared with a steeper decline in the broader market. Dividend-focused exchange-traded funds (ETFs) are also in the green. According to a report by Franklin Templeton, between August 2024 and January 2025, dividend ETFs listed in the US attracted average monthly net inflows of nearly $3.3 billion—marking a significant rise from just $107 million during the same stretch a year earlier.
The report also mentioned that dividend-focused strategies have repeatedly shown their ability to act as a defensive play, regardless of the region or market cycle. Over the three years ending December 31, 2024, companies that paid dividends experienced less volatility and smaller peak-to-trough declines than the broader market across global, US, and European benchmarks. When inflation concerns and interest rate jitters resurfaced in August 2024, dividend stocks proved more resilient than most, weathering the storm better than the wider market. Given this, we will take a look at some of the best profitable stocks that pay dividends.
A close-up of an assembly line with a blend of tobacco products.
Our Methodology:
For this list, we screened for stable dividend companies that have strong dividend growth track records. From that group, we picked companies with a net profit margin exceeding 30%, which suggests sound financial health and excellent cost management. The stocks are ranked in ascending order of their net profit margin as of the most latest quarter.
At Insider Monkey, we are obsessed with hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Altria Group Inc. (NYSE:MO)
Net Profit Margin: 55.10%
Altria Group Inc. (NYSE:MO) ranks second on our list of the most profitable stocks that pay dividends. The Virginia-based tobacco company manufactures a wide range of related products, including cigarettes and other nicotine products. With smoking rates on the decline, the company is facing an uncertain future. While Altria offers a range of products in emerging categories, it lacks the dominant market position that Marlboro once held for many years. Even today, the company still relies heavily on cigarette sales, with combustible products accounting for more than 90% of its operating income last year.
In the fourth quarter of 2024, Altria Group Inc. (NYSE:MO) posted a revenue of $5.11 billion, marking a 1.63% increase from the previous year and surpassing analyst expectations by $59.6 million. The company saw higher earnings and improved margins in its core tobacco business, driven by strong brand performance. In addition, the company continued making strategic investments aimed at supporting long-term growth. For 2025, the company anticipates adjusted diluted EPS to range between $5.22 and $5.37, reflecting an expected growth of 2% to 5% compared to its 2024 EPS of $5.12.
Altria Group Inc. (NYSE:MO) has always remained committed to its shareholder obligation, returning $6.8 billion to investors through dividends in FY24. In addition, it has raised its payouts for 55 years straight. The company offers a quarterly dividend of $1.02 per share and has a dividend yield of 7.28%, as of April 6.
Overall, MO ranks 2nd on our list of the best dividend stocks from the regional banking sector. While we acknowledge the potential of MO as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued dividend stock that is more promising than MO but that trades at 10 times its earnings and grows its earnings at double digit rates annually, check out our report about the dirt cheap dividend stock.
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Disclosure: None. This article is originally published at Insider Monkey.