Stifel reaffirmed its Buy rating and $54.00 price target for Altria Group Inc. (NYSE:MO), following the company's announcement of a dividend increase. The board of directors of Altria has approved a 4.1% rise in its quarterly dividend, now at $1.02 per share, up from the previous $0.98.
This increment moves the annual dividend to $4.08 and achieves an 80% payout ratio based on the forecasted earnings per share for the fiscal year 2024.
Since Altria's corporate reorganization in 2008, the company has consistently raised its dividend each year. The current increase maintains this trend, with a compound annual growth rate (CAGR) of nearly 8% in dividends, slightly surpassing its steady earnings per share (EPS) growth over the same period.
Stifel anticipates this pattern to continue, expecting further mid-single digit increases in dividends supported by robust free cash flow (FCF) generation.
The firm's analysis suggests that Altria's strong dividend payments, coupled with effective free cash flow generation and share repurchase programs, as well as a steady EPS growth outlook for the mid-term, are key factors that underpin the potential for the stock's upward movement.
Stifel's ongoing endorsement with a Buy rating is based on these financial strategies and the company's historical performance.
Altria's commitment to enhancing shareholder value through dividends is part of its broader financial strategy. The company's ability to maintain a high payout ratio while also ensuring consistent growth in dividends and EPS reflects its financial health and operational stability.
Stifel's confidence in the stock is rooted in these attributes, which are expected to drive the stock's performance in the medium term.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.