Altria Group Inc (MO)

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Altria: Income Play With Dividend Increases For 21 Years, Buy The Dip
By: Seeking Alpha | December 15, 2019

Altria Group (MO), the largest manufacturer of tobacco products in the United States, is a buy for the income growth investor with the present entry price looking good. The management of MO is good and has continued to grow the business by using its cash to expand the product base, add to its existing products, and buy back shares. Investments in Cronos (OTC:CRON) and JUUL have the potential for good future sales when a firm cause of the vaping issue is defined. Altria Group is 4.7% of The Good Business Portfolio, my IRA portfolio of good business companies that are balanced among all styles of investing.

Altria is being reviewed using The Good Business Portfolio. I use a set of guidelines that I codified over the last few years used to review the companies in The Good Business Portfolio (my portfolio) and other companies that I am reviewing. For a complete set of guidelines, please see my article "The Good Business Portfolio: Update to Guidelines, August 2018". These guidelines provide me with a balanced portfolio of income, defensive, total return, and growing companies that hopefully keeps me ahead of the Dow average.

When I scanned the five-year chart, Altria Group has a fair chart going up, and to the right in a steady, strong slope in 2014 through mid-2017, then it hit a bump down when the FDA said it would regulate nicotine. The FDA delay in approving IQOS and JULL review creates a buying opportunity to buy Altria Group 38% below the 2-year high price of $78.



Data by YCharts

Altria is reviewed in the following topics below.

Investment Fundamentals

• Company Business
• Conclusions
• Portfolio Management Highlights
• Investment Fundamentals

The Good Business Portfolio Guidelines are just a screen to start with and not absolute rules. When I look at a company, the total return is a key parameter to see if it fits the objective of the Good Business Portfolio. My total return guideline is that total return must be greater than the Dow's total return over my test period. Altria beats against the Dow baseline in my 59-month test compared to the Dow average. I chose the 59 month test period (starting January 1, 2015, and ending to date) because it includes the great year of 2017, and other years that had a fair and bad performance. The poor MO total return of 22.88% compared to the Dow base of 56.11% makes Altria a poor investment for the total return investor that also wants a steadily increasing income. Looking back five years, $10,000 invested five years ago would now be worth over $11,700 today. This gain makes Altria, a fair investment for the total return investor looking back, which has future growth as the worldwide need for more smokeless products. The high yield gives excellent income for the income growth investor while we wait for the vaping issue to be defined further...

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