Want $1,000 in dividend income? Here’s how much you should invest in Altria stock.

tobacco giant Altria Group (Missouri 1.41%) It has been one of the most notable dividend stocks of the past few decades. Despite hundreds of billions of dollars in legal settlements, the product’s addictive nature allowed it to offer generous payouts to lure investors into the stock.

Still, the popularity of its main product, cigarettes, has been declining for decades, so investors should take a closer look at the entire business before trying to profit from such dividends.

Altria’s Dividend

Altria pays an annual dividend of $3.92 per share. At current prices, the dividend yield is 8.75%. This means an investor would need to invest $11,430 to receive $1,000 per year.

The rate of return is almost 7 times. S&P 500The average is 1.3%. Additionally, management has increased the dividend every year since 2009, and the previous two “dividend cuts” involved spinoffs that freed up more shares for investors. So it has become a great source of income.

This growth is especially impressive considering that the surgeon general’s report on the dangers of smoking came out 60 years ago. Despite long-term declines in smoking rates and massive legal costs, Altria stock and dividends have grown tremendously since then.

MO data from YCharts.

However, sales declined in 2023 and are expected to do so again in 2024. Altria suffered heavy losses due to its failed investment in vaping company Juul and its cannabis investments. Kronos Group This doesn’t bode well for the company.

Altria later invested $2.75 billion in vaping company NJOY. Still, if sales cannot return to growth, dividends may eventually be in jeopardy.

Should You Buy Altria for Its Dividend?

Despite the high yields, investors should think twice about buying Altria for its payout. Of course, both tobacco stocks and dividends have beaten the odds and risen over the past few decades.

But sales are declining and management has not established a clear path to growth again. Until growth resumes, investors will probably have to look elsewhere for dividends, even if it means having to invest more to achieve that $1,000 payout.