Once in a while, an incredible headline hits the financial media or press and goes something like this: “People Making $100,000 to $200,000 Are Living Paycheck to Paycheck.” While many would scoff at that, the reality is wealthy millennials and Gen Z are always buying what they want, when they want. With groceries now cited as having the biggest inflationary pressure, even those living “paycheck to paycheck” are starting to shop at outlets with the lowest prices.
In a recent report, about six in 10 Americans were indeed living paycheck to paycheck in August, according to the commerce data platform PYMNTS and personal loans websites. Additional published reports indicate almost 45% of Americans who make $100,000 or more were in the category, compared with 38% last year.
Jefferies pointed out that groceries have replaced gasoline as the biggest inflation culprit, but other areas like travel and even rent inflation are hitting consumers hard. While screening the massive Jefferies list of consumer-related stocks, we looked for Buy-rated companies that pay dividends where data indicates that the wealthy are shifting their spending to as they cut costs.
It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
This maker of tobacco products offers value investors a great entry point now as it has been hit as cigarette sales have slowed. Altria Group Inc. (NYSE: MO) is the parent company of Philip Morris USA (cigarettes), UST (smokeless), John Middleton (cigars), Ste. Michelle Wine Estates and Philip Morris Capital. PMUSA enjoys a 51% share of the U.S. cigarette market, led by its top cigarette brand Marlboro.
Altria also owns over 10% of Anheuser-Busch InBev, the world’s largest brewer. In March 2008, it spun off its international cigarette business. In December 2018 it acquired 35% of Juul Labs, but the stock was pounded last summer when the FDA announced a ban on all sales of Juul vape pens.
In October, the company, which at the height of its popularity dominated the market with its sweet flavors, agreed to pay $438.5 million in a settlement with 33 states and one territory over marketing its Juul product to teens. Altria announced recently that it is looking to end its noncompete agreement with Juul to compete more aggressively in the vape space on its own.
While this gets sorted out, it is a good bet that investors will still receive that 8.40% dividend. Jefferies has a $51 target price on Altria stock. The consensus target is $48.73, and shares closed on Monday at $45.15.
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