Dividend King Altria Recently Raised Its Quarterly Dividend by Nearly 5%. Is the Stock a Buy?

Investing in dividend stocks is a great way for investors to establish a passive stream of income that is often more reliable than investing solely for appreciation.

However, there is more to dividend investing than meets the eye. Companies may be forced to cut their dividends if their operations start to slip, and high dividend yields can turn into a trap.

Altria Group (NYSE: MO) has long been viewed as a strong dividend stock, and the company recently raised its quarterly dividend by nearly 5%. Is the Dividend King, a company that has raised its dividend for 50 consecutive years, a buy?

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What does Altria do, and how is the business performing?

Before examining Altria's dividend, investors should understand what the company does, as the business itself generates the free cash flow and earnings that ultimately drive the dividend.

Investors unfamiliar with Altria will likely be more familiar with some of the brands the company owns. Altria makes tobacco products such as cigarettes, as well as smoke-free products like nicotine patches. One of its most renowned brands is Philip Morris USA, the maker of Marlboro cigarettes.

While there are still plenty of people who smoke cigarettes, health concerns have naturally led people to look elsewhere for their nicotine, particularly to smokeless products such as nicotine pouches and e-cigarettes. Altria owns brands such as Copenhagen, Skoal, and on! Plus.

In the first half of 2026, Altria reported net revenue of over $11.5 billion, up 1.6% from the same period in 2025. Adjusted diluted earnings per share grew nearly 5%.

In the first half of the year, smokeable product shipment volume declined by 2.7% compared with the same period in 2025. Oral tobacco product shipment volume fell 6%.

On Altria's second-quarter earnings call, CFO Heather Newman said, "Economic pressure on adult smokers continued to impact cigarette industry dynamics," which in turn led people to turn to cheaper brands for their smoking habits.

Meanwhile, oral tobacco products struggled due to tough comparables in 2025, as consumers shifted away from moist tobaccoless products toward nicotine pouches. On! volume rose 5.1% in the first half of the year, compared to the same period in 2025.

Altria's strong dividend

On Aug. 27, Altria increased its quarterly dividend by 4.7% to $1.11 per share, for an annualized dividend of $4.44 per share. This gives Altria an incredibly strong dividend yield of over 6.5%.

What's even more impressive is that Altria is a Dividend King, meaning it has paid and raised its annual dividend for at least 50 consecutive years. In fact, Altria has done this for 57 years, an accomplishment very few companies can match.

As mentioned, the key to evaluating dividend companies is ensuring they generate sufficient earnings and free cash flow to continue paying the dividend and raise it in the future. With the new dividend, Altria would pay out $2.22 in dividends over six months, which is equivalent to roughly 79% of the company's adjusted diluted earnings through the first half of 2026.

Meanwhile, Altria generated nearly $2.9 billion of free cash flow through the first half of 2026 (operating cash flow minus capital expenditures), which is actually less than the nearly $3.6 billion in dividends the company paid out, and that's before the recent increase.

Cash and equivalents have also fallen from nearly $4.5 billion at the end of 2025 to nearly $2.4 billion at the end of June, although it's not uncommon for the company to burn more cash in the first half of the year and then rebuild it in the second half.

Ultimately, being a Dividend King makes the dividend a critical part of Altria's investment thesis. Management knows this and will try to avoid ending this streak at all costs.

That said, the financials are a bit tighter in this case, so while I believe you can invest in this dividend stock, you'll also need to monitor the quarterly financial results to ensure there is no deterioration in the balance sheet.

Bram Berkowitz 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.