Altria’s Dividend Sustainability in Question Amid Declining Cigarette Volumes

Altria's forward dividend yield of 6.6% has investors scrutinizing its payout sustainability rather than earnings momentum. While the company has raised dividends annually since 2009, persistent declines in cigarette volumes cast doubt on future payouts.

Q2 results showed mixed signals: adjusted EPS ROSE 8.3% to $1.44, beating estimates, but revenue net of excise taxes fell 1.7%. The on! nicotine pouch segment grew 26.5%, offsetting a 10.2% plunge in cigarette shipments. Marlboro volumes dropped 11.4%, reflecting ongoing industry headwinds.

Guidance was raised, yet fundamental challenges remain. The oral tobacco segment's 6% revenue growth demonstrates Altria's diversification efforts, but cigarette declines continue to pressure cash flows supporting the dividend.