Forget Tilray: This Boring Dividend Beast Is a Much Savvier Play

These days, the marijuana industry is no one's idea of a high-growth sector loaded with potential. One of its signature stocks, Tilray Brands (NASDAQ: TLRY), is a case in point; the company is chronically unprofitable and, year to date, its shares are down by more than 12%.

But what if I told you there's a company in an adjacent industry that's not only trading well in positive territory but is also habitually profitable and pays a high-yield dividend? And here's the kicker -- it's deeply invested in the recreational cannabis business. Read on to find out about this investor favorite that's a sneaky, sideways play on cannabis for marijuana bulls.

Time to light up!

That stock is tobacco giant Altria Group (NYSE: MO), which continues to be a moneymaking powerhouse despite the long-term, secular decline in cigarette consumption worldwide, especially in its native United States.

Image source: Getty Images.

It helps that the appeal of cigarettes is strong for any consumer with a smoking habit. Altria's annual revenue regularly tops $20 billion, and, because traditional smokes are cheap to produce and can be sold at relatively high prices, net margins are lofty and free cash flow (FCF) is robust.

The last factor is important for investors because the mountains of FCF Altria produces can, and always are, used to fund generous dividend payouts.

Not only that, but the company management is always declaring dividend raises, so much so that Altria is a Dividend King, one of the few stocks that has increased its distribution at least once annually for a minimum of 50 years in a row. Currently, the company's streak stands at 56.

To a degree, it's admirable that Altria has managed to keep its payout on the rise, because that's not the trajectory of its revenue net of excise taxes. Since 2022, this has eroded every year (although we're not talking steep declines -- from 2021's $21.1 billion, the metric slipped to $20.1 billion in 2025).

Altria has made a concerted effort to wean itself from dependence on traditional cigarette sales. Early in this decade, the company launched its Moving Beyond Smoking strategy, an initiative to shift away from traditional cigarettes toward next-generation tobacco products. This move rests on oral nicotine products, vapes, and heated tobacco systems.

The jury's still out on this move. The company originally set a series of goals to be achieved by the end of 2028, including nearly doubling revenue from such products to $5 billion annually. Because of regulatory issues with some of those goods, plus determined competition from rivals, this might not happen. Altria remains dependent on sales of traditional smokes, which were responsible for nearly 87% of revenue net of excise taxes last year.

Others have enjoyed more success in nontraditional segments. I'm thinking in particular of Philip Morris International, another high-yield dividend payer whose third quarter of 2025 featured a 41% contribution to net revenue from next-generation tobacco offerings.

Deep in the weeds

But unlike Altria, Philip Morris isn't invested in the recreational marijuana market (although it has significant stakes in medical weed companies). In 2019, Altria plowed the equivalent of roughly $1.8 billion into Canadian cannabis company Cronos; at the moment, that gives the tobacco giant an approximate 41% stake.

Surely, some Altria investors aren't happy about this, because Altria's 156 million-plus shares are worth only $429 million at Cronos's latest closing price. Still, at some point, resistance to decriminalizing marijuana will fade away, as will the lingering restrictions on cannabis businesses in America. At that point, if any institutional marijuana investor is going to capitalize on the opportunity, it'll be Altria.

Even if that doesn't happen, the tobacco company is a solid income stock, with a high-yield dividend (paying out at over 6%) that puts plenty of coin in investor pockets. That's a lot more than we can say for most pure-play marijuana companies, Tilray included.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Cronos Group. The Motley Fool recommends Philip Morris International and Tilray Brands. The Motley Fool has a disclosure policy.