There are few things income investors love more than a high-yield dividend.
What if you could combine this with a stock that has outpaced the broader market, at times obliterating a top equity index? And the icing on the cake, this grizzled veteran of its business is a Dividend King, one of the very few stocks that has pumped out dividend raises at least once annually for a minimum of 50 years in a row. Read on to discover which equity I have in mind.
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High margins and high yields
Before I unwrap it, I have to caution that this is a “sin stock,” underpinning a business that some find distasteful or even offensive. With that, I’ll reveal the company is Altria (MO -0.41%), the cigarette maker best known for its Marlboro brand.
Smoking is, of course, very much out of fashion and restricted in Altria’s home (and sole direct) market, the U.S. Because of this, Altria implemented the Moving Beyond Smoking strategy years ago. As the name suggests, this is an attempt to shift its business away from traditional cigarettes and into next-generation consumption options like e-cigarettes and vapes.
For a company that grew to prominence and vast wealth selling those traditional wares, the change hasn’t been easy. In its most recently reported quarter, the company’s smokable products accounted for a sky-high 88% of its $6.1 billion total net revenue.
Meanwhile, oral tobacco goods accounted for almost 12%, while the “all other” category, into which those next-generation products are lumped, tallied $6 million — under one-tenth of 1%.
However, Altria probably isn’t in a rush to reshape its business model. After all, despite the many negatives about smoking, cigarette making is still a large, hugely profitable enterprise.
Altria doesn’t manage to move the needle much on total net revenue — it basically flat-lined in the second quarter, while profitability dipped by over 3% year over year — but its net margins remain enviable. The company’s nearly $2.3 billion in headline net profit translated to a margin of almost 38%. Most businesses would be satisfied with 10%.
Today’s Change
(-0.41%) $-0.28
Current Price
$67.89
Key Data Points
Market Cap
Day’s Range
$67.39 – $68.39
52wk Range
$54.70 – $77.06
Volume
37.4K
Avg Vol
8.7M
Gross Margin
83.00%
Dividend Yield
6.25%
Bulging coffers
Smokables are, as ever, inexpensive to make and command premium prices for customers (even in states where the excise tax is relatively modest). They also require little or no innovation; the Marlboros your friends sneakily consume are basically the same ones grandpa kept in his shirt pocket.
This makes Altria quite the free cash flow (FCF)-generating machine. Its FCF topped $9 billion in 2025, more than enough to fund both that year’s dividend payments (of just under $7 billion) and an active stock repurchase program that amounted to $1 billion.
Very few things are sure in this world, but Altria’s dividend raises come close. The latest one was a nearly 5% bump to a quarterly payout of $1.11 per share. That yields almost 6.5% at a time when the average yield of all S&P 500 stocks is barely above 1%.
Altria isn’t a stock for every investor. Yet for folks who don’t mind the heavy aspects of the business and want to earn a high-yield dividend that’s steadily rising, this one’s a solid choice.
