5 Best Passive Income Stocks to Buy Now

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

Number of Hedge Fund Holders: 47

Dividend Yield as of June 3: 6.65%

Altria Group, Inc. (NYSE:MO) is another stock on our list that offers a dividend yield of more than 6% as of June 3. The Henrico County, Virginia-based company, is involved in the manufacturing, distribution, and marketing of cigarettes, tobacco, and other related products.

Although the company is operating in an industry that is evolving rapidly as customers are switching away from traditional tobacco-filled cigarettes to products like JUUL for vaping and Cronos for cannabis, Altria Group, Inc. (NYSE:MO) also holds the exclusive for iQOS in the US. Altria Group, Inc. (NYSE:MO) pays an annual dividend of $3.6, translating into a dividend yield of 6.65% as of June 3.

In its Q2 2021 investor letter, Altria Group, Inc. (NYSE:MO) was discussed by Broyhill Asset Management. Here’s what the firm said:

“Altria (MO) shook off the prospects of a ban on menthol and a potential cap on nicotine and gained 20%. We shared our thoughts on these regulations during the quarter, which are available here.

MO Valuation. MO is up ~ 18% YTD (even accounting for the recent sell-off). We expect MO to generate close to $5 in annual FCF per share over the next few years, putting the stock at ~ 10x, which is less than half the market’s multiple today. Over the last decade, shares have traded at an average multiple of 15x and within a range of ~ 10x – 20x (+/-1 standard deviation). The stock yields 7.2% at the current price, close to a 6% premium to treasuries. Historically, shares have traded closer to a 3% premium to the 10Y, which would imply a ~ $75 share price.”

Of the 912 hedge funds in Insider Monkey’s database at the end of Q1 2022, 47 hedge funds held a stake in Altria Group, Inc. (NYSE:MO).