Altria Group (NYSE:MO) and Philip Morris International (NYSE:PM) are two prominent names in the tobacco sector. These companies are benefiting from their stronghold in the tobacco sector and have been able to support their profits by raising prices. Moreover, the high dividend yield of both MO and PM continues to attract investors’ attention.
Don't Miss our Black Friday Offers:
- Discover the latest stocks recommended by top Wall Street analysts, all in one place with Analyst Top Stocks
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
Let’s delve deeper into both stocks.
Altria Group
Altria Group is the manufacturer of some of the well-known brands, such as Marlboro, Parliament, and Virginia Slims. The company has raised dividends for the past 54 consecutive years and targets a payout ratio of 80%. Furthermore, MO stock currently has an impressive dividend yield of 9.26%.
In light of the decreasing demand for traditional cigarettes due to health concerns, Altria has diversified into the e-cigarette market by investing in manufacturers like Juul Labs and NJOY. Further, it entered the growing cannabis market via its stake in Cronos Group and introduced innovative nicotine alternatives such as oral pouches. These diverse offerings should continue to support Altria’s top-line growth in the near term.
What is the Future of MO Stock?
Altria stock has received three Buy and four Hold recommendations for a Moderate Buy consensus rating. The average MO stock price target of $45.71 implies 9.2% upside potential. The stock has declined 2.5% in the past six months.
Philip Morris
The company has impressively raised dividends for the past 16 years and carries a high dividend yield of 5.39%. PM currently has a dividend payout ratio of 84%.
Owing to evolving consumer preferences, Philip Morris expanded its product portfolio with a strong emphasis on smoke-free alternatives like tobacco-based IQOS. By staying focused on tobacco, PM can capitalize on its established tobacco supply chain. This enables efficient distribution of IQOS while securing attractive profit margins from cartridge sales.
Is PM a Buy or Sell?
Philip Morris stock has a Moderate Buy consensus rating based on seven Buys, one Hold, and one Sell. The average stock price target of $106.72 implies 11.6% upside potential from here. The stock is up 0.5% over the past six months.
Ending Thoughts
MO and PM can be considered attractive stocks because of their high dividend yields. It is worth noting that Wall Street analysts anticipate that these stocks will post decent gains in the next 12 months. Investors who want to generate consistent passive income may want to consider including these stocks in their portfolios.
