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Is Altria's 9% Monster Dividend Yield Safe?

Given Altria's (MO 2.73%) dividend, one can forgive casual observers for assuming Altria's cash yield is a dividend trap. The yield currently comes in at 9.1%, more than five times the average S&P 500 dividend return of around 1.75%.

Nonetheless, while Altria is a troubled stock on some levels, its more prominent issues do not relate to its finances. Considering the continuing long-term growth of its payout, income investors could profit from taking a position in this tobacco stock.

The state of Altria and its payout
Since the Surgeon General's report on the dangers of smoking came out in 1964, both governments and social groups have campaigned against tobacco. Moreover, Altria has faced numerous lawsuits as medical professionals tied millions of deaths to tobacco use. Settling these cases cost the company billions of dollars over the last few decades.

However, none of these challenges prevented Altria from offering more passive income. After approving a 4.4% dividend increase earlier this year, Altria's annual payout now stands at $3.76 per share.

Also, its annual payout has risen in 30 of the past 33 years. The only reason it is not a Dividend Aristocrat is that it cut its dividend in 2007 and 2008 amid the spinoffs of Kraft (now a part of Kraft Heinz) and Philip Morris International.
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