5 Safe Dividend Stocks with High Yields

In this article, we will discuss 5 safe dividend stocks with high yields. To read our detailed analysis of dividend investing, you can go directly to 10 Safe Dividend Stocks with High Yields.

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

Dividend Yield as of December 29: 7.71%

Number of Hedge Funds: 45

Altria Group, Inc. (NYSE:MO) manufactures and sells cigarettes, smoke-free products, other nicotine-based products globally. The Henrico County, Virginia-based company was one of the 30 members of the Dow Jones Industrial Average for 23 years from 1985. However, the company lost its position after it spun off its 88.1% holding in Kraft Foods Inc. (NYSE:KHC) in 2007 and Philip Morris International Inc. (NYSE:PM) in 2008.

On December 9, Altria Group, Inc. (NYSE:MO) declared a quarterly dividend of 90 cents per share. In August, the company increased its quarterly dividend from $0.86 per share to $0.90 per share, reflecting an increase of 4.7%.

There was speculation in the tobacco industry implying that Philip Morris International Inc. (NYSE:PM) is pursuing a merger back with Altria Group, Inc. (NYSE:MO). However, these rumors were put to rest by Jacek Olczak, CEO of Philip Morris who said that Philip Morris is ready to move ahead and focus on increasing its footprint in the “pharmaceutical and therapeutic” segment.

Altria Group, Inc. (NYSE:MO) is diversifying into e-vapor, tobacco heating solutions like IQOS. It also made a multi-billion dollar investment in the cannabinoid company Cronos Group. The investment made Altria Group, Inc. (NYSE:MO) the biggest shareholder in the company.

Altria Group, Inc. (NYSE:MO) was mentioned in the Q2 2021 investor letter of Broyhill Asset Management. Here’s what the investment management 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.”