5 Best American Dividend Stocks to Invest In

4. Altria Group, Inc. (NYSE: MO)

Dividend Yield: 6.88%
Number of Hedge Fund Holders: 37

Altria Group, Inc. (NYSE: MO) is headquartered in Richmond, Virginia and is a well known tobacco company that manufactures and sells cigarettes, wine, and oral tobacco products in the United States. The company has experienced a tough financial year in 2020 due to the COVID-19 pandemic with its net revenues decreasing by 5.1% to $6 billion in the first quarter of 2021. However, Altria Group, Inc. (NYSE: MO) has still maintained its long-term objective of a dividend payout ratio target of 80% of the adjusted diluted EPS. In the first quarter of 2021, the company paid $1.6 billion in dividends and has announced an annualized dividend of $3.44 per share for the entire year. The dividend per share growth rate for the company was 3% during the past fiscal year. For the past 5 years, this dividend growth rate was approximately 10.20% annually making it one of the best American dividend stocks to invest in.

Oakmark Funds, in their Q1 2021 investor letter, mentioned Altria Group, Inc. (NYSE: MO). Here is what the fund said:

“We initiated a new position in Altria, which commands roughly 50% of the cigarette and smokeless tobacco market in the U.S. Both of these markets are duopolies that we believe have exhibited strong pricing power over time. While the shares trade at a low multiple of reported earnings, Altria also owns valuable stakes in other non-core businesses, including ~10% of AB InBev, 35% of Juul and 45% of Cronos. Excluding the values of these stakes and their respective earnings contribution, we were able to purchase shares of Altria for less than seven times our estimate of next year’s earnings. This compares to other consumer brands with less favorable earnings growth profiles that trade for three times Altria’s multiple. The company also has several promising reduced-risk products that may appeal to tobacco users, including On! and iQOS. We believe these products position the company well to help consumers slowly transition to a tobacco-free future. We expect management to return the vast majority of future earnings to shareholders given the company’s strong balance sheet, high free cash flow conversion and limited capital requirements.”