Introduction
Whenever leveling a criticism against one of the market’s beloved Dividend Champions, one can expect a consistent stream of backlash from its stalwart defenders, so I feel it necessary to begin this piece with a caveat of sorts. I am not here to argue a future of doom and gloom for one of the steadiest income machines the markets have ever seen. Nor am I here to recommend a Sell to any of the longstanding investors of Altria (NYSE:MO), some of whom have received more in dividends than the original capital they invested. However, I do want to discuss some of the challenges this long-standing pillar of the New York Stock Exchange is facing - challenges which I see as being ignored by the loyalist following of the company. After reading some recent articles in defense of the Big Tobacco giant, I can’t help but feel like the arguments for the next 25 years of sustainable income and price appreciation aren’t nearly as strong as they were for the 25 years prior.
Altria and its fellow Big Tobacco giants have faced continual pressure from an increasingly health-conscious society for decades now, especially in the U.S. Still, they have been able to push past declining volumes and produce steady revenues, income and dividends by increasing the prices of their addictive products year after year. This simply cannot continue forever. Eventually something has to give. I believe the times are changing.
