U.S. Smoking Rates Hit All-Time Lows
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2 days ago
0mins
Source: NASDAQ.COM
- Declining Smoking Rates: According to the CDC, U.S. adult smoking rates have fallen to an all-time low of 9.1%, directly impacting Altria as the largest tobacco company, which now faces a shrinking market and must seek new growth avenues.
- Pricing Power Resilience: Despite declining volumes, Altria has managed to retain customer loyalty through its pricing power; in Q1, while Marlboro's retail market share dropped by 1.4 percentage points, its discount brand Basic gained 2.4 percentage points, demonstrating the company's adaptability across market segments.
- Dividend Appeal: With a current dividend yield of 6.1%, slightly below its 6.6% average over the past decade, Altria remains attractive to investors as a “Dividend King” with a 56-year streak of increases, especially given the S&P 500's yield is just above 1%.
- New Product Progress: Altria's On! nicotine pouches saw a 17.5% year-over-year increase in shipments to 46.2 million cans in Q1; although it lost 0.8 percentage points in the oral tobacco market, its availability in over 100,000 stores across all 50 states indicates ongoing efforts in the smoke-free product segment, suggesting potential for future growth despite challenges.
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Analyst Views on MO
Wall Street analysts forecast MO stock price to fall
8 Analyst Rating
4 Buy
3 Hold
1 Sell
Moderate Buy
Current: 70.600
Low
57.00
Averages
65.00
High
72.00
Current: 70.600
Low
57.00
Averages
65.00
High
72.00
About MO
Altria Group, Inc. operates a portfolio of tobacco products for United States tobacco consumers aged 21+. Its segments include smokeable products and oral tobacco products. The smokeable products segment consists of combustible cigarettes and machine-made large cigars. The oral tobacco products segment includes moist smokeless tobacco (MST) products and oral nicotine pouches. Its wholly owned subsidiaries include manufacturers of both combustible and smoke-free products. In combustibles, it owns Philip Morris USA Inc. (PM USA), and John Middleton Co. (Middleton), which are cigarette manufacturers. Its smoke-free portfolio includes ownership of U.S. Smokeless Tobacco Company LLC (USSTC), a global MST manufacturer, Helix Innovations LLC (Helix), a manufacturer of oral nicotine pouches, and NJOY, LLC (NJOY), an e-vapor manufacturer with a commercialized product portfolio. The brand portfolios of its operating companies include Marlboro, Black & Mild, Copenhagen, Skoal, on! and NJOY.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Altria Faces Challenges in Tobacco Market
- Market Share Dynamics: Despite the U.S. adult smoking rate dropping to an all-time low of 9.1%, Altria's flagship Marlboro brand lost 1.4 percentage points in retail market share in Q1, while its discount brand Basic gained 2.4 percentage points, demonstrating the company's adaptability in price competition.
- Dividend Appeal: Altria is regarded as a premier dividend stock with a current yield of 6.1%, slightly below its 6.6% average over the past decade, and has a 56-year streak of dividend increases, reflecting its commitment to shareholders and financial stability.
- Free Cash Flow Status: In Q1, Altria reported free cash flow of $2.23 billion, paying out $1.8 billion in dividends and $280 million in share buybacks, with an 81% payout ratio (excluding buybacks) remaining safe, indicating no major issues in sustaining its dividend.
- Smoke-Free Product Progress: Altria is working to launch On! nicotine pouches, which, despite competition from Zyn, saw a 17.5% year-over-year increase in shipments to 46.2 million cans in Q1, and are now available in over 100,000 stores nationwide, showcasing its potential and market expansion capabilities in the smoke-free product segment.
See More
DFUS Stock Price Analysis and ETF Dynamics
- Price Fluctuation Analysis: DFUS's 52-week low is $64.12 per share and the high is $82.965, with the last trade at $82.32, indicating the stock is oscillating near its high, which may influence investor buying decisions.
- Technical Analysis Tool: Comparing the latest share price to the 200-day moving average can provide valuable insights for investors, helping to assess market trends and potential buying opportunities.
- ETF Trading Mechanism: Exchange-traded funds (ETFs) trade similarly to stocks, where investors are buying and selling 'units' that can be created or destroyed based on investor demand, impacting the liquidity and market performance of the ETF.
- Inflows and Outflows Monitoring: Weekly monitoring of changes in shares outstanding for ETFs helps identify those experiencing significant inflows or outflows, allowing investors to evaluate the impact on underlying assets and make more informed investment decisions.
See More
U.S. Smoking Rates Hit All-Time Lows
- Declining Smoking Rates: According to the CDC, U.S. adult smoking rates have fallen to an all-time low of 9.1%, directly impacting Altria as the largest tobacco company, which now faces a shrinking market and must seek new growth avenues.
- Pricing Power Resilience: Despite declining volumes, Altria has managed to retain customer loyalty through its pricing power; in Q1, while Marlboro's retail market share dropped by 1.4 percentage points, its discount brand Basic gained 2.4 percentage points, demonstrating the company's adaptability across market segments.
- Dividend Appeal: With a current dividend yield of 6.1%, slightly below its 6.6% average over the past decade, Altria remains attractive to investors as a “Dividend King” with a 56-year streak of increases, especially given the S&P 500's yield is just above 1%.
- New Product Progress: Altria's On! nicotine pouches saw a 17.5% year-over-year increase in shipments to 46.2 million cans in Q1; although it lost 0.8 percentage points in the oral tobacco market, its availability in over 100,000 stores across all 50 states indicates ongoing efforts in the smoke-free product segment, suggesting potential for future growth despite challenges.
See More
Defensive Investment Opportunities in Consumer Staples Stocks
- Coca-Cola's Stability: As the world's largest beverage company, Coca-Cola has raised its dividend for 64 consecutive years, currently offering a yield of 2.7%, demonstrating resilience through nine recessions and positioning itself well for future economic downturns.
- Altria's Diversification Strategy: As America's top tobacco company, Altria boasts a 6.2% dividend yield and anticipates generating at least $5 billion in smoke-free revenue by 2028, showcasing its growth potential amid declining tobacco consumption.
- Procter & Gamble's Brand Strength: Procter & Gamble, one of the largest consumer staples companies globally, offers a 3% dividend yield and has a 70-year history of dividend increases, with a strong brand portfolio that supports stable growth, expecting a 5% CAGR in EPS from 2025 to 2028.
- Market Valuation Analysis: Despite the S&P 500 rallying nearly 30% over the past year, Coca-Cola, Altria, and Procter & Gamble have P/E ratios of 24, 12, and 21 respectively, indicating that these defensive stocks remain attractive amid market volatility.
See More
Valuation Analysis of U.S. Consumer Staples Stocks
- Valuation Overview: Kraft Heinz (KHC), General Mills (GIS), and Clorox (CLX) are identified as the most attractively valued consumer staples stocks, indicating their undervaluation relative to peers in the market.
- Valuation Metrics Analysis: The valuation grades incorporate multiple metrics, including P/E, PEG, price-to-sales, and price-to-cash-flow ratios, using both current and forward-looking estimates, providing crucial insights for investors' decision-making.
- Market Performance Comparison: Among companies with a market cap above $10 billion, Kraft Heinz leads with an A+ rating, followed by General Mills and Clorox with A and A- ratings respectively, highlighting their strong investment appeal in the current market environment.
- Industry Dynamics Impact: Despite the overall positive market performance, Heinz experienced a pullback after six consecutive days of gains, reflecting cautious market sentiment regarding its future performance and underscoring the volatility within the consumer staples sector.
See More
The Truth About Investment Yields and Retirement Savings
- Yield Target Analysis: Generating $4,800 annually from a $40,000 investment requires a 12% blended yield, which is nearly double the current payouts from Altria, Verizon, and Main Street Capital, highlighting the risks and challenges of chasing high yields.
- Portfolio Earnings: Dividing the $40,000 into three parts of approximately $13,333 each for investment in Altria, Verizon, and Main Street Capital yields an estimated annual income of about $2,700, with a blended yield close to 7%, significantly below the ideal target, reflecting a common misunderstanding about high yields in the market.
- Tax Implications: Dividends from Altria and Verizon are qualified and taxed at long-term capital gains rates, while most distributions from Main Street Capital are ordinary income taxed at marginal rates, suggesting that holding BDCs is more tax-efficient in IRA or Roth accounts.
- Long-Term Investment Strategy: It is advisable to set realistic yield expectations, with 6% to 7% being more achievable, and to reinvest distributions during the accumulation phase, only switching to cash payouts when income is actually needed, which can significantly enhance the final balance for retirement savings.
See More
Altria Faces Challenges in Tobacco Market
- Market Share Dynamics: Despite the U.S. adult smoking rate dropping to an all-time low of 9.1%, Altria's flagship Marlboro brand lost 1.4 percentage points in retail market share in Q1, while its discount brand Basic gained 2.4 percentage points, demonstrating the company's adaptability in price competition.
- Dividend Appeal: Altria is regarded as a premier dividend stock with a current yield of 6.1%, slightly below its 6.6% average over the past decade, and has a 56-year streak of dividend increases, reflecting its commitment to shareholders and financial stability.
- Free Cash Flow Status: In Q1, Altria reported free cash flow of $2.23 billion, paying out $1.8 billion in dividends and $280 million in share buybacks, with an 81% payout ratio (excluding buybacks) remaining safe, indicating no major issues in sustaining its dividend.
- Smoke-Free Product Progress: Altria is working to launch On! nicotine pouches, which, despite competition from Zyn, saw a 17.5% year-over-year increase in shipments to 46.2 million cans in Q1, and are now available in over 100,000 stores nationwide, showcasing its potential and market expansion capabilities in the smoke-free product segment.
See More
DFUS Stock Price Analysis and ETF Dynamics
- Price Fluctuation Analysis: DFUS's 52-week low is $64.12 per share and the high is $82.965, with the last trade at $82.32, indicating the stock is oscillating near its high, which may influence investor buying decisions.
- Technical Analysis Tool: Comparing the latest share price to the 200-day moving average can provide valuable insights for investors, helping to assess market trends and potential buying opportunities.
- ETF Trading Mechanism: Exchange-traded funds (ETFs) trade similarly to stocks, where investors are buying and selling 'units' that can be created or destroyed based on investor demand, impacting the liquidity and market performance of the ETF.
- Inflows and Outflows Monitoring: Weekly monitoring of changes in shares outstanding for ETFs helps identify those experiencing significant inflows or outflows, allowing investors to evaluate the impact on underlying assets and make more informed investment decisions.
See More
U.S. Smoking Rates Hit All-Time Lows
- Declining Smoking Rates: According to the CDC, U.S. adult smoking rates have fallen to an all-time low of 9.1%, directly impacting Altria as the largest tobacco company, which now faces a shrinking market and must seek new growth avenues.
- Pricing Power Resilience: Despite declining volumes, Altria has managed to retain customer loyalty through its pricing power; in Q1, while Marlboro's retail market share dropped by 1.4 percentage points, its discount brand Basic gained 2.4 percentage points, demonstrating the company's adaptability across market segments.
- Dividend Appeal: With a current dividend yield of 6.1%, slightly below its 6.6% average over the past decade, Altria remains attractive to investors as a “Dividend King” with a 56-year streak of increases, especially given the S&P 500's yield is just above 1%.
- New Product Progress: Altria's On! nicotine pouches saw a 17.5% year-over-year increase in shipments to 46.2 million cans in Q1; although it lost 0.8 percentage points in the oral tobacco market, its availability in over 100,000 stores across all 50 states indicates ongoing efforts in the smoke-free product segment, suggesting potential for future growth despite challenges.
See More
Defensive Investment Opportunities in Consumer Staples Stocks
- Coca-Cola's Stability: As the world's largest beverage company, Coca-Cola has raised its dividend for 64 consecutive years, currently offering a yield of 2.7%, demonstrating resilience through nine recessions and positioning itself well for future economic downturns.
- Altria's Diversification Strategy: As America's top tobacco company, Altria boasts a 6.2% dividend yield and anticipates generating at least $5 billion in smoke-free revenue by 2028, showcasing its growth potential amid declining tobacco consumption.
- Procter & Gamble's Brand Strength: Procter & Gamble, one of the largest consumer staples companies globally, offers a 3% dividend yield and has a 70-year history of dividend increases, with a strong brand portfolio that supports stable growth, expecting a 5% CAGR in EPS from 2025 to 2028.
- Market Valuation Analysis: Despite the S&P 500 rallying nearly 30% over the past year, Coca-Cola, Altria, and Procter & Gamble have P/E ratios of 24, 12, and 21 respectively, indicating that these defensive stocks remain attractive amid market volatility.
See More
Valuation Analysis of U.S. Consumer Staples Stocks
- Valuation Overview: Kraft Heinz (KHC), General Mills (GIS), and Clorox (CLX) are identified as the most attractively valued consumer staples stocks, indicating their undervaluation relative to peers in the market.
- Valuation Metrics Analysis: The valuation grades incorporate multiple metrics, including P/E, PEG, price-to-sales, and price-to-cash-flow ratios, using both current and forward-looking estimates, providing crucial insights for investors' decision-making.
- Market Performance Comparison: Among companies with a market cap above $10 billion, Kraft Heinz leads with an A+ rating, followed by General Mills and Clorox with A and A- ratings respectively, highlighting their strong investment appeal in the current market environment.
- Industry Dynamics Impact: Despite the overall positive market performance, Heinz experienced a pullback after six consecutive days of gains, reflecting cautious market sentiment regarding its future performance and underscoring the volatility within the consumer staples sector.
See More
The Truth About Investment Yields and Retirement Savings
- Yield Target Analysis: Generating $4,800 annually from a $40,000 investment requires a 12% blended yield, which is nearly double the current payouts from Altria, Verizon, and Main Street Capital, highlighting the risks and challenges of chasing high yields.
- Portfolio Earnings: Dividing the $40,000 into three parts of approximately $13,333 each for investment in Altria, Verizon, and Main Street Capital yields an estimated annual income of about $2,700, with a blended yield close to 7%, significantly below the ideal target, reflecting a common misunderstanding about high yields in the market.
- Tax Implications: Dividends from Altria and Verizon are qualified and taxed at long-term capital gains rates, while most distributions from Main Street Capital are ordinary income taxed at marginal rates, suggesting that holding BDCs is more tax-efficient in IRA or Roth accounts.
- Long-Term Investment Strategy: It is advisable to set realistic yield expectations, with 6% to 7% being more achievable, and to reinvest distributions during the accumulation phase, only switching to cash payouts when income is actually needed, which can significantly enhance the final balance for retirement savings.
See More
