Ongoing investigations against Juul are hurting Altria’s (NYSE:MO) stock price. Plus, the rising death toll arising from e-cigarette use is scaring away investors exposed to the cigarette market. Still, MO stock offered a dividend yielding 8.37% last week. Income investors cannot ignore this stock any longer.
Philip Morris (NYSE:PM), which erased some of the drop in September after the two firms announced they would not merge, is another suitable dividend-income stock. At a yield above 6%, investors may look at both stocks. But Altria is discounted more, falling by ~40% from yearly highs.
After the Vapor Technology Association filed a lawsuit seeking to overturn the flavored product ban, reasonable regulations on vaping will help restore investor confidence on Altria stock. When cigarette smokers trying to quit and use vaping instead, there are many benefits to society.
Health-care costs fall, the smoker’s longevity improves and Altria investors get rewarded. Conversely, blindly banning flavored vaping may solve nothing. The Centers for Disease Control reported vaping-related deaths but no one knows what is causing them. If Juul and Altria prove that their product is still safe, then Altria stock will recover.
At a forward P/E in the single digits, Altria stock is very attractive and reflects much of the risks it faces ahead.
