Altria Group's Future Uncertainty: Impact of Declining Cigarette Volume on Dividend Yield
Sunday, 12 May 2024, 18:24
Accelerating cigarette volume decline
The fundamental issue for Altria is declining cigarette usage in the U.S. Management estimated a 9% volume decline in the first quarter of 2024, accelerating from 8% decline in 2023.
Historical trends and current challenges
- Historically, Altria offset volume declines by raising cigarette prices.
- With lower volumes and revenue growth, profit margins are stagnant.
Can new products replace tobacco?
Management invested in new products like nicotine pouches and vaping to combat cigarette decline.
The dividend is safe (for now)
Despite challenges, Altria's 8.7% dividend yield is projected to remain stable in the near term due to cash flow and buyback strategies.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.