Why Altria stock is down 12% in 2023

While the rest of the stock market was on fire last year, Altria (Missouri 0.78%) It was turning into ashes. Shares of the Marlboro maker fell 12%, according to data from S&P Global Market Intelligence, as the dividend wasn’t enough to attract investors to a business model that many believe is in inevitable decline. because of.

There wasn’t a single piece of news that sent Altria stock down last year, mostly disappointing earnings reports and competitor revelations. British American Tobacco At the end of the year, 2023 ended with a loss entry.

As you can see from the chart, Altria S&P 500.

^SPX data from YCharts

Is there smoke coming from Altria?

For years, Altria has tried to diversify from smokable tobacco products into next-generation products such as cigarette sticks and vaporizers, but these efforts have been largely futile. The company also had to take large writedowns on its investments in JUUL and cannabis growers. Kronos Group.

Most of these challenges continued in 2023. Tobacco stocks’ first big decline of the year came in late March after an investor conference failed to convince investors of the opportunity at hand.

At its Investor Day conference, Altria lowered its earnings-per-share growth target to the mid-single digits by 2028 and did not announce any moves to realize the value some investors had hoped for, including a stake sale. AB InBev.

Altria’s stock was little changed through the second quarter, and the company lowered its guidance after completing its acquisition of NJOY in June.

The stock fell in line with the S&P 500 index in the third quarter, then plunged in its third-quarter earnings report in October, falling 8.3% on Oct. 26 after it lowered its guidance to reflect increased spending on smoking cessation research and smoke-free policies. . Amortization of $50 million of intangible assets related to the NJOY acquisition.

Finally, Altria shares fell by 3 on December 6 after British American Tobacco, which owns competing brands such as Camel, announced it would take a $31 billion write-down on the value of its U.S. cigarette brands, reflecting macro headwinds and vision. % fell. Create a world without smoke.

Image source: Getty Images.

What’s next for Altria?

Altria remains a dividend powerhouse, currently offering a 9.6% dividend yield, and the company expects to increase its dividend in the mid-single digits over the next few years.

However, Altria still faces several headwinds, including declining sales, a double-digit decline in cigarette sales, and failure to find another growth business.

Dividend investors should be aware that stocks can easily decline if current trends do not change.