Altria (MO) will be facing increased regulatory pressures in upcoming years, which will stress its cigarettes business. This stable dividend champion is having to innovate in the smokeless category to drive growth, while working on its cost structure to maintain and increase margins.
However, the price is the most attractive it has been since July 2014. Since then I have found it to be overpriced, I believe it is now fair. This is what I would recommend to dividend growth investors:
If you don’t own Altria yet, or not as much as you would like to own, you should consider initiating or adding to your position at these prices and building up a position liberally over upcoming year if better prices turn up. If you already have a core position and are only waiting for bargains to buy more, maybe more patience is a virtue. Remember that the opportunity cost of an incremental 1% dividend yield is approximately two years.
