Altria (NYSE: MO) is among the leading sin stocks but is still a good dividend play today. Up more than 17.5% in the last few weeks, the purveyor of tobacco products is on track to reclaim the high end of a long-term trading range and possibly set new highs. Among the drivers for this move is the company’s considerable cash flow, which is used to repurchase shares, pay market-beating dividends, and maintain a healthy balance sheet. 

Here are 7 Compelling Reasons Altria is A Good Buy for Income Investors

#1 Altria has Value - Altria provides a deeper value than virtually all blue-chip dividend stocks. The company trades at a mere 9X this year’s earnings outlook and 8.75X next year with growth in the forecast. This is less than half the valuation of the average S&P 500 (NYSEARCA: SPY) stock. It is about half what you pay for Duke Energy Co., which has half the yield and less than 35% of the blue-chip leaders in sectors like Tech, Consumer Staples, Consumer Discretionary, and other high-profile dividend-paying sectors. When it comes to earnings-bang for your buck, Altria has it. 

#2 Altria is a Dividend King - Dividend Kings are stocks that have paid and made annual dividend distribution increases for at least fifty years. This significant milestone marks companies with stable cash flows and a management structure committed to long-term business health and value creation. Altria has increased its dividend for fifty-five years and is on track to continue the trend. The company’s payout ratio is high but offset by an outlook for earnings growth and a healthy balance sheet. As it is, the distribution CAGR runs near 4%, enough to offset inflation. 

#3 Altria is a High-Yielding Stock - Altria is a high-yielding stock with a payout of nearly 8.35%, with shares at nearly $47. That is at the high end of the range for stocks worth buying and more than 4X the S&P 500 average. The payout is safe relative to cash flow and more due to share repurchases. Share repurchases are reducing the count and freeing up capital to sustain annual increases long into the future. If the yield falls, the most likely reason will be a higher share price. 

#4 Earnings; Growth is Back - Altria struggled some over the last year or two due to shifting consumer habits and the impact of JUUL. However, the company is expected to return to growth in the current quarter due to improving comps and solid shipment data from Q1. Analysts expect revenue and earnings growth to accelerate into F2025 and support the company’s robust capital return program. 

#5 Altria Accelerates Share Repurchase Program - The big news from Q1 is the accelerated share repurchase program. The company announced a $2.4 billion accelerated repurchase authorization in addition to the existing $1 billion already in place. The bulk of the $2.4 billion has already been spent; the remainder is expected to be used by the end of June, and the final $1 billion by the end of the year. The total figure was worth about 5% of the market cap at the time of release and will positively impact shareholder value. The average share count is down 1.6% at the end of Q1. 

#6 Altria has a Healthy Balance Sheet - Altria uses debt to help finance operations, but the balance sheet is fine. The $25.042 billion in debt at the end of Q1 is flat compared to last year, leaving leverage at 0.7X assets. There is a shareholder deficit, but this is a situation in which a deficit is good. It is a function of share repurchases because the company effectively spends money on nothing but building shareholder leverage. 

#7 Analysts Hold Altria - Analysts' sentiment alone is not a reason to buy Altria but another factor impacting its buyability. Markrtbeat.com tracks more than a dozen analysts with ratings on this stock; they peg it at hold and view it as fairly valued at current levels. The activity is light, and the group does not issue regular revisions, but there is some interesting activity this year. The three updates issued in 2024 include a reiterated Buy with a $50 price target, about 1000 basis points of upside, a boosted price target and an upgrade. Ultimately, the buy-and-hold mentality of Altria investors leads to reduced volatility; the stocks' 24-month beta is less than 0.5X the S&P 500, and the 5-year is near 0.65X.

Altria’s Technical Price Action is Strong

Atlria’s uptrend looks strong. The market recently consolidated and confirmed the trend, indicating another push higher is likely. The next target for significant resistance is near 

$48; a move above that could take it to $50. A move above $50 will depend on market conditions and sales in the current quarter. If the company affirms the growth outlook, this stock could rally into year’s end.