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Altria: Hikes And Increased Income, Against All Odds, Yield 8%

Published Sat, 15 Aug 2020 10:45:07 -0400 on Seeking Alpha

Seeking AlphaDividend Ideas | ConsumerĀ Altria: Hikes And Increased Income, Against All Odds, Yield 8%Aug. 15, 2020 10:45 AM ET|| About: Altria Group, Inc. (MO), Includes: BTI, IMBBY, JUUL, PMby: Rida MorwaRida Morwa High Dividend OpportunitiesThe #1 Service for Income Investors and Retirees, 9-10% dividend yield.SummaryQ2 2020 results were better than expected for Altria and it even hiked its dividends.
We take a closer look at the numbers and the current economics to confirm our prior positive outlook.
Altria is a strong buy for its income prospects. It's a buy-and-hold for the long run.
We are buyers at the current price, but would not chase beyond $44/share. We explain why.
Co-produced with Trapping Value
Early in July when we recommended Altria Group (MO) and added it to our Portfolio, we explained our positive outlook on its total return prospects. This was built on a historically high dividend yield, a very low valuation of enterprise value / EBITDA (EV to EBITDA multiple), and the longer term potential for "I quit original smokingā€(or IQOS) to stabilize revenues for the company. Those positives were tempered by lower visibility through the pandemic and also IQOS launch delays which appeared to make it more of a 2021 story. With Q2-2020 financial results out, we examine in this report how our thesis shaped up and if MO is still a solid buy.
Q2-2020 Results
Altria re-instituted guidance for the year after having withdrawn it in Q1-2020. Earlier, it had limited visibility on supply disruption as well as the extent to which hoarding was distorting the final numbers. The last few months though have shed light on trends and Altria felt comfortable providing guidance. It now expects adjusted EPS to come in between $4.21 to $4.38 for this year. This would be a growth of 0% to 4% over 2019 adjusted EPS numbers, which is impressive given the current recession, and in light of the fact that world GDP is due for a remarkable drop, in the range of... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
BRITISH AMERICAN TOBACCO 37.99   0.0 0.00 2.68 6.64
PHILIP MORRIS INTERNATIONAL 74.90   14.9 5.03 4.68 6.12
IMPERIAL BRANDS 27.17   0.0 0.00 0.00 0.00


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