Could Buying Altria Today Set You Up for Life?

If you are looking to set yourself up with a lifetime of income, Altria (NYSE: MO) and its 6.4% dividend yield are probably on your investment short list. Given the long history of regular dividend increases on offer, that makes total sense. But there are some things you need to consider before you buy this consumer staples maker. It may not be as safe an investment as you think.

What does Altria do?

Altria makes tobacco products, with its largest business being cigarettes. That said, it also makes cigars, chewing tobacco, nicotine pouches, and vaping products. Clearly, its business is highly focused on nicotine delivery systems. That's why it is a consumer staples company and not a consumer discretionary company.

Image source: Getty Images.

Tobacco products are not a necessity. Altria, in fact, is probably best placed into a category of investments known as "sin stocks." The reason it is a consumer staples business is that tobacco products have addictive properties, which makes the buyers very loyal customers. So, like other consumer staples items (think toilet paper, toothpaste, and food), Altria's products tend to be bought regularly regardless of the economic environment.

That would seem like a good reason to believe that Altria could set you up for a lifetime of reliable dividends. But there's one small problem -- Altria's core cigarette business isn't doing particularly well. The proof of that is the ongoing volume decline it has faced in recent years. The year-over-year volume drop in the second quarter of 2025 was a huge 10.2%. That's not an anomaly; it is the continuation of a long trend.

Altria is having a hard time fixing the issue

The headwind Atria faces is that there is a long-term trend away from smoking cigarettes. It has attempted to offset the impact of declining volumes on its income statement by raising prices. That worked well for a time, but the tactic may have run its course, with volume declines now too large to offset with price hikes. The revenue the company generated from its smokeable products fell 2.5% year over year in the second quarter of 2025, when you remove the impact of tobacco taxes.

To make matters worse, the company's efforts to find new growth businesses haven't been impressive. For example, it invested in vape maker Juul and marijuana company Cronos (NASDAQ: CRON). Both ended with little to show for the effort other than large write-offs.

And it is worth noting that Altria also chose to spin off Philip Morris International (NYSE: PM). That company sells the same brands as Altria, just outside of North America. Cigarette sales outside of North America are relatively strong, and Philip Morris International has now entered the U.S. market with non-cigarette nicotine products. Essentially, Altria made the decision to spin off what would have been its best businesses and, at the same time, created a new competitor in its home market.

Even the most recent growth-oriented investment has hit a roadblock. Not long ago, Altria bought all of vape maker NJOY, which had been performing well. But NJOY ended up losing a legal battle with Juul, forcing NJOY to curtail the sale of some of its products. It seems like Altria should have had a better handle on this issue, given its previous investment in Juul.

Companies make mistakes, but it seems like Altria has made a lot of mistakes. And all of them appear to end up hurting shareholders.

Add it all up, and Altria is probably a pass for most investors

Sure, Altria has a very attractive dividend yield. But there's material risk involved with that yield that will likely put off most investors. Certainly, conservative dividend investors should think twice before buying the stock. If the company's business performance, from cigarette volumes to strategic initiatives, can't be turned around, the company's future isn't likely to be as positive as investors hope. And that dividend yield might be a lot riskier than it seems.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Cronos Group. The Motley Fool recommends Philip Morris International. The Motley Fool has a disclosure policy.