The heavy dividend payer has already carried out nicely for traders thus far in 2025.
Traders are bulled up on hypergrowth expertise shares proper now, particularly something associated to synthetic intelligence (AI). I’d guess that many readers have giant publicity to those AI shares which were large winners in the previous few years.
There’s nothing inherently improper with allocating your portfolio to hypergrowth shares. Nonetheless, if you’re an older or extra conservative investor, now stands out as the good time to optimize your portfolio for performing by all market cycles. Hypergrowth AI shares soar throughout bull markets, however when the inevitable bear market hits (like in 2022), they will crash. If you’re not comfy with 50% or increased drawdowns, extra conservative dividend-paying shares could also be for you.
One ultra-high dividend-yielding inventory that has carried out nicely thus far in 2025 is Altria Group (MO 0.66%). The tobacco and nicotine big has a dividend yielding over 6%. Does that make it the proper inventory to purchase in preparation for a market crash?
Regular tobacco money flows
Altria owns manufacturers like Marlboro cigarettes, oral tobacco merchandise, cigars, and digital nicotine vapes. It additionally has a big funding in Anheuser Busch.
Utilization of cigarettes in america — Altria’s core market — has been in decline for years. The corporate has optimized its earnings regardless of these declines by worth will increase, price cuts, and financialization of its cigarette enterprise. This has pushed consolidated free money stream on the firm to develop by 59% within the final 10 years, hitting $8.7 billion during the last 12 months.
So as to construct its enterprise for the long run, Altria is slowly investing to maneuver past cigarettes. Its cigars enterprise is regular, whereas digital vaping and nicotine pouches proceed to develop. Its On! nicotine pouch model reported 26.5% quantity progress final quarter. To additional increase into new nicotine classes, Altria simply partnered with KT&G Company out of South Korea for publicity to new nicotine pouch manufacturers and investments into the power house. It’s too early to inform what the impact of this partnership shall be, however it reveals the place Altria is concentrated for the way forward for its operations.
Picture supply: Getty Pictures.
Regular dividend progress
Cigarettes hold offering Altria with regular money stream, bolstered by worth will increase. The inventory now has a dividend yield of 6.27%, with its dividend per share payout rising steadily prior to now 10 years, up 87.6% over that timespan.
The corporate is producing free money stream per share of $5.15, versus the present annual dividend per share of $4.24. This hole between free money stream and dividend obligations ought to permit the corporate to continue to grow its dividend payout to shareholders, even at a beginning yield of over 6%. Together with share repurchases that decreased shares excellent and subsequently make it simpler to boost the dividend per share, Altria has a transparent path to continue to grow its dividend per share over the following decade, simply because it has within the final one.
MO Dividend information by YCharts.
Is Altria Group a purchase to arrange for a market crash?
In contrast to different stylish companies reminiscent of AI infrastructure investments that will expertise enormous ranges of volatility in a market crash or recession, tobacco companies reminiscent of Altria stay regular by all market environments. In reality, volumes for tobacco and nicotine utilization really enhance when the financial system is in tough form.
That makes the inventory an ideal purchase to stability out a portfolio of hypergrowth AI names. When you personal regular dividend shares like Altria, not solely do you get 6%+ again in your funding yearly in money, you might need a inventory that does nicely when the market inevitably crashes. That might offer you a counterbalance in your portfolio to benefit from any dips.
If you’re anxious about having an excessive amount of publicity to AI progress shares, Altria Group stands out as the good ultra-high dividend-yielding inventory for you.
Brett Schafer has no place in any of the shares talked about. The Motley Idiot has no place in any of the shares talked about. The Motley Idiot has a disclosure coverage.
