Altria’s High Dividend Really Is Too Good to Be True

1 min read

Altria (NYSE: MO), the largest tobacco company in America, is often considered a stable dividend stock. It pays a high forward yield of 8.4%, and it trades at just nine times forward earnings. It’s raised its payout every year since spinning off its overseas business as Philip Morris International (NYSE: PM) over a decade ago, and it spent just over three-quarters of its free cash flow on its dividends over the past 12 months.

Unfortunately, investors should realize Altria’s big dividend is a bright red flag, for four simple reasons.

Image source: Getty Images.

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