Altria Group (NYSE:MO) has fallen 30% over the past 12 months. And while that may be concerning to investors, it could make the stock an attractive buy for its dividend.
The bad news is that the company is coming off a disappointing quarter where it had to write down its investment in Juul which sent its earnings deep into the red. Vaping deaths and controversies surrounding e-cigarettes this year have put Juul under the microscope, and that’s had a very negative impact on the company’s future.
The good news, however, is that Altria’s own operations are still strong with the company reporting an operating profit of $2.9 billion this past quarter.
And what’s been even more impressive is that over the trailing 12 months, Altria has generated free cash flow of more than $6.8 billion, which is more than the $6 billion in dividends that it paid out during that time.
That means that the dividend still looks very strong, and it’s been growing as well. Earlier this year, Altria hiked its payouts from $0.80 every quarter to $0.84, for an increase of 5%. If we go back five years, the stock was paying $0.52 every quarter, meaning that it has risen by more than 61% since then, averaging a compounded annual growth rate of 10%.
Altria’s share price has risen by 9% over the past month, coming off a 52-week low. And that could suggest that the worst may be over – for now. As a result, now could be a good time for investors to consider picking up the stock.
