Altria Group, Inc. (MO): One of the Safe Dividend Stocks with Yields Above 5%

We recently published a list of the 10 Safe Dividend Stocks with Yields Above 5%. In this article, we are going to take a look at where Altria Group, Inc. (NYSE:MO) stands against other safe dividend stocks.

Dividend-paying stocks have long held a special place among investors, often delivering stronger returns than the broader market over time. Within this strategy, there’s an ongoing debate between those prioritizing high yields and others who focus on companies with a steady track record of dividend growth. While analysts tend to favor firms that consistently boost shareholder payouts, the allure of high yields remains strong. Experts caution, however, that investors should avoid yield traps and instead target companies that combine attractive yields with reliable dividend increases.

A study by Newton Investment Management lends weight to the case for high-yield stocks. It found that during inflationary periods from 1940 to 2021, high-yield dividend stocks outpaced the broader market. The report also showed that portfolios with high-dividend-yielding stocks performed better than those with little or no dividend exposure. Specifically, high-yield portfolios outperformed low-yield portfolios by 199 basis points and zero-yield portfolios by 330 basis points in terms of value-weighted returns. However, the study didn’t explore the specific market conditions behind these results, offering more of a general overview.

Further backing the benefits of high-yield stocks, Hartford Funds conducted research looking at risk and return over the long haul. From December 1969 to March 2024, high-yield portfolios returned an average of 12.3% annually, compared to 10.5% for mid-yield and 9.7% for low-yield portfolios. When measured by annualized standard deviation—a common gauge of volatility—high-yield portfolios also showed lower risk (14.1%) than their mid-yield (16%) and low-yield (20.8%) counterparts.

Analysts note that dividend stocks can offer a layer of stability during market turbulence, especially when investors prioritize income. Still, they advise sticking to high-yield stocks only if they come with a proven record of dividend growth.

That said, this isn’t a hard rule. Many companies manage to offer both solid yields and consistent dividend increases. High yields, in themselves, aren’t a red flag—in fact, dividend yield plays a vital role in income-focused investing by showing the income potential relative to a stock’s price.

Amid the growing excitement around AI and tech stocks, dividend-paying companies have somewhat fallen off investors’ radar. However, the recent market downturn has brought them back into focus. Since the beginning of 2025, the Dividend Aristocrats Index, which tracks the performance of companies with 25 consecutive years of dividend growth, has fallen by over 2% while the broader market has slipped by nearly 10%.

Over the long haul, the strength of these dividend-focused stocks becomes even more evident. A report by S&P Global revealed that from January 2000 through February 2025, the Dividend Aristocrats Index outpaced its benchmark by an average of 1.59% annually. This consistent outperformance is largely credited to the solid fundamentals of the companies that make up the index.

Our Methodology:

For this list, we scanned Insider Monkey’s database of over 1,000 hedge funds as of Q4 2024 and picked dividend stocks with strong dividend policies and sound financials. From that group, we picked stocks that have yields above 5%, as of April 20. The stocks are ranked in ascending order of their dividend yields.

At Insider Monkey, we are obsessed with hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Altria Group, Inc. (NYSE:MO)

Dividend Yield as of April 20: 7.02%

Altria Group, Inc. (NYSE:MO) is a Virginia-based tobacco company that manufactures a wide range of related products, including cigarettes and other nicotine products. The company also focuses on nicotine products and has a business model that tends to hold up well during periods of market and economic uncertainty. Even though the use of traditional cigarettes is declining in the US, overall demand for nicotine remains steady. Holding nearly half of the US market, the company enjoys significant advantages. These include cost efficiencies from its scale, strong negotiating power with retailers due to its control of top-selling brands like Marlboro and JUUL, and the ability to invest more heavily than competitors in newer nicotine alternatives, such as smokeless products.

In the final quarter of 2024, Altria Group, Inc. (NYSE:MO) reported revenue of $5.11 billion, a year-over-year increase of 1.63% that beat analyst forecasts by $59.6 million. The growth was supported by improved margins and solid performance across its flagship tobacco brands. The company also continued to channel funds into initiatives that support long-term expansion. For 2025, it expects adjusted diluted EPS to come in between $5.22 and $5.37, implying 2% to 5% growth over its 2024 earnings of $5.12 per share.

Known for its strong focus on shareholder returns, Altria Group, Inc. (NYSE:MO) distributed $6.8 billion in dividends during fiscal 2024 and has now increased its dividend for 55 consecutive years. The company’s quarterly dividend comes in at $1.02 per share and has a dividend yield of 7.02%, as of April 20.

Overall, MO ranks 3rd on our list of the safe dividend stocks with yields over 5%. While we acknowledge the potential of MO as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued dividend stock that is more promising than MO but that trades at 10 times its earnings and grows its earnings at double digit rates annually, check out our report about the dirt cheap dividend stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None. This article is originally published at Insider Monkey.