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Altria Group Inc (MO): Avoid Overseas Drama! 3 Domestic High Yielders to Buy Today

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Cyprus may be scary. Europe may continue to feel the pain. Overseas problems may cause headaches in the United States as well — seeing as many problems can affect this country, too. Many corporations operate globally, and often get dragged down by international woes. Here are some companies that have little to no exposure outside of the States, however, who also enjoy wide moats.

Altria Group (MO)

Smoking tends to be recession proof…

After spinning off its international tobacco unit into Philip Morris International Inc. (NYSE:PM), Altria Group Inc (NYSE:MO) decided to focus on the U.S. market exclusively. The company operates in a saturated market, which is constantly pestered by activists and the taxman. Is this bad? Maybe not. The barriers for entry are raised due to this environment, and established players like Altria Group Inc (NYSE:MO) (which is a leader in the industry and most famous for its Marlboro brand) enjoy the protection of wide moats.

Many people simply choose not to invest in tobacco on moral grounds. If your moral barometer fails to lead you away from tobacco stocks, however, Altria Group Inc (NYSE:MO) may be for you if you are looking for yield with little international exposure. The company pays a dividend yielding around 5.2%.

Altria Group Inc (NYSE:MO) looks fairly valued as well. Priced at around 16 times earnings, the company looks cheaper going forward. Altria’s forward P/E is close to 13. People tend to smoke in good times and bad, and even if the tobacco industry as a whole constantly faces threats and pressure, the moat is pretty protected for the “old-guard” established players like Altria Group Inc (NYSE:MO) as long as there are smokers. It may also offer an opportunity for future growth — such as the legalization of marijuana, electronic cigarettes, and smokeless products. Fun fact: Altria Group Inc (NYSE:MO) is one of Ben Bernanke’s favorites, as well.

Telecommunications will keep growing…

The duopoly known as Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T) dominate the domestic telecommunications market. AT&T is trading at only around 13-14 times forward earnings, and pays out a dividend yielding almost 5%. The stock offers a lot of value at current levels. Many investors are concerned about the company’s abnormally high payout ratio of over 100%, but if you consider and evaluate the payout ratio using operating cash flow instead of earnings, these worries may evaporate.

I recently read a good article diving deeper into this subject (which can be read here), and believe the dividend is definitely safe and might be increased further, as long as the company continues to generate massive amounts of cash.

Will it? I think so, seeing as Cisco Systems, Inc. (NASDAQ:CSCO) has forecasted that “Global mobile data traffic will increase 13-fold between 2012 and 2017. Mobile data traffic will grow at a compound annual growth rate (CAGR) of 66 percent from 2012 to 2017, reaching 11.2 exabytes per month by 2017.”

This will continue to assist AT&T and its profits. As cloud-computing ramps up, the telecom giant would see better revenue and profit. This wide-moat company will provide you with high domestic yield, just be sure to keep an eye on those cash flows.

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