The heavy dividend payer has already accomplished nicely for traders to this point in 2025.
Traders are bulled up on hypergrowth know-how shares proper now, particularly something associated to synthetic intelligence (AI). I might guess that many readers have giant publicity to those AI shares which were huge winners in the previous few years.
There’s nothing inherently incorrect with allocating your portfolio to hypergrowth shares. Nevertheless, in case you are an older or extra conservative investor, now stands out as the excellent time to optimize your portfolio for performing by means of all market cycles. Hypergrowth AI shares soar throughout bull markets, however when the inevitable bear market hits (like in 2022), they’ll crash. In case you are not comfy with 50% or greater drawdowns, extra conservative dividend-paying shares could also be for you.
One ultra-high dividend-yielding inventory that has accomplished nicely to this point in 2025 is Altria Group (MO 0.59%). The tobacco and nicotine big has a dividend yielding over 6%. Does that make it the right inventory to purchase in preparation for a market crash?
Regular tobacco money flows
Altria owns manufacturers like Marlboro cigarettes, oral tobacco merchandise, cigars, and digital nicotine vapes. It additionally has a big funding in Anheuser Busch.
Utilization of cigarettes in the US — Altria’s core market — has been in decline for years. The corporate has optimized its income regardless of these declines by means of worth will increase, value cuts, and financialization of its cigarette enterprise. This has pushed consolidated free money circulate on the firm to develop by 59% within the final 10 years, hitting $8.7 billion over the past 12 months.
With a view to construct its enterprise for the longer term, Altria is slowly investing to maneuver past cigarettes. Its cigars enterprise is regular, whereas digital vaping and nicotine pouches proceed to develop. Its On! nicotine pouch model reported 26.5% quantity development final quarter. To additional broaden into new nicotine classes, Altria simply partnered with KT&G Company out of South Korea for publicity to new nicotine pouch manufacturers and investments into the vitality house. It’s too early to inform what the impact of this partnership will likely be, but it surely reveals the place Altria is targeted for the way forward for its operations.
Picture supply: Getty Photographs.
Regular dividend development
Cigarettes hold offering Altria with regular money circulate, bolstered by worth will increase. The inventory now has a dividend yield of 6.27%, with its dividend per share payout rising steadily up to now 10 years, up 87.6% over that timespan.
The corporate is producing free money circulate per share of $5.15, versus the present annual dividend per share of $4.24. This hole between free money circulate and dividend obligations ought to permit the corporate to continue to grow its dividend payout to shareholders, even at a beginning yield of over 6%. Together with share repurchases that lowered shares excellent and due to this fact make it simpler to lift the dividend per share, Altria has a transparent path to continue to grow its dividend per share over the subsequent decade, simply because it has within the final one.
MO Dividend information by YCharts.
Is Altria Group a purchase to arrange for a market crash?
Not like different stylish companies similar to AI infrastructure investments that will expertise big ranges of volatility in a market crash or recession, tobacco companies similar to Altria stay regular by means of all market environments. In truth, volumes for tobacco and nicotine utilization truly enhance when the economic system is in tough form.
That makes the inventory an ideal purchase to stability out a portfolio of hypergrowth AI names. For those who personal regular dividend shares like Altria, not solely do you get 6%+ again in your funding yearly in money, you might need a inventory that does nicely when the market inevitably crashes. That would offer you a counterbalance in your portfolio to reap the benefits of any dips.
In case you are anxious about having an excessive amount of publicity to AI development shares, Altria Group stands out as the excellent ultra-high dividend-yielding inventory for you.
Brett Schafer has no place in any of the shares talked about. The Motley Idiot has no place in any of the shares talked about. The Motley Idiot has a disclosure coverage.
