Up 25%, Is Altria Group Still a Great Dividend Stock?

Key Points

• Altria's dividend is still yielding 6.27%.

• The company's strong cash flow and growth from new nicotine categories can help grow the dividend over the next decade.

• Altria stock is still cheap for dividend investors after running up 25% this year.

• These 10 stocks could mint the next wave of millionaires ›

Dividends can be a savings grace through all market environments. But that doesn't mean you should buy dividend stocks for your portfolio just because they have a high dividend yield. Altria Group (NYSE: MO) is a dividend stock whose price is up 25% this year, with the tobacco giant transitioning to new nicotine categories. It's trading near all-time highs as of this writing on Sept. 28, 2025.

Today, Altria Group has a dividend yield of 6.27%. Up 25% this year, is Altria Group still a great dividend stock to own in your portfolio? Or is the stock now too expensive to buy today? Let's take a closer look at the numbers and find out.

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Dividend yield and dividend growth

Altria Group owns the cigarette brand Marlboro in the United States, which is the core driver of its financial performance along with smaller contributions from discount cigarettes, cigars, chewing tobacco, and nicotine pouches.

These legacy cash cows have made Altria a consistent dividend growth stock, with 60 dividend increases in the last 56 years. That makes it one of the top dividend stocks in history. Earlier this year, Altria's dividend yield was approaching 8%. That means for every $100 an investor had in Altria Group, they would receive $8 in dividend income each year. Today, that dividend yield has fallen to 6.27%, which makes the stock a bit more expensive. However, it still has a significantly stronger dividend yield than the S&P 500 index average of just over 1% right now.

Altria's dividend growth has been a steady drumbeat in the last decade, up around 87% in the last 10 years and driving long-term gains for shareholders. Investors thinking of buying the stock today at its still-high dividend yield of 6.27% need to think about how sustainable this growth is.

Image source: Getty Images.

Altria's sustainable cash flows

Luckily for investors, we can look to the data to decide whether Altria Group's dividend yield and payout will be sustainable in the years to come. Even though cigarette usage in the United States has been in decline for decades, brands like Marlboro have kept growing earnings due to consistent price increases. This is why, even though Altria's tobacco unit volumes are down near all-time lows, its operating earnings grew 4.4% year over year last quarter.

On top of price increases, Altria is slowly diversifying away from cigarettes through electronic vaping and nicotine pouches, which are secular growers in the nicotine sector. This can be the long-term driver of growth for Altria to help further counter cigarette volume declines.

Lastly, Altria's dividend per share payout over the last 12 months is $4.24, while its free cash flow per share was around $5.15. This gap means that Altria has plenty of room to sustainably increase its dividend without growing its free cash flow, a figure that has grown steadily over the long term. Adding all three of these factors together should give investors confidence in Altria's continued dividend growth over the next 10 years.

MO Free Cash Flow Per Share data by YCharts.

Is Altria still a great dividend stock?

Altria Group's dividend has grown by 87% in the last 10 years. With more price increases, diversification into new nicotine categories, and the current gap between free cash flow and dividend payouts, I think the stock can repeat this growth over the next 10 years as well. A starting dividend yield of 6.27% means that in 10 years, Altria shareholders who buy today will have a dividend yield of over 10% on their cost basis, which is income they are earning quarter after quarter.

Altria Group stock is up 25% this year, but I still think it is a great dividend stock for investors searching for steady dividend income through all market environments.

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Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.