America’s Best Dividend Stock Soars 23%

Stocks with high yields are not supposed to participate in market rallies. Their role is to provide stability and a safe dividend. They are, essentially, a defensive play. However, what is probably the company with the safest dividend which has been raised 55 times over the last year, has rallied 23% while the S&P 500 is up only 9%.

Altria (NYSE: MO) has a yield of 6.4%. Among major US public companies, that is matched by only Dow (NYSE: DOW) and Pfizer (NYSE: PFE). Pfizer’s stock is down 8% this year. Dow’s is down 47%, Dow actually cut its dividend in half last month.

As important as anything else about Altria is that, because of its dividend record it qualifies to be a Dividend King. It has paid out $32 billion in dividends over the fiscal years 2020-2024. It has also purchased $8 billion of its shares during the same period.

In the most recently reported quarter, Altria’s revenue was down 6% to $5.3 billion. However, its adjusted diluted EPS was up 6% to $1.23. It affirmed its guidance of a 2% to 5% increase in EPS for the full year. Its success in the most recent quarter came from its legacy business: Billy Gifford, Altria’s Chief Executive Officer, commented, “Our highly profitable traditional tobacco businesses performed well in a challenging environment in the first quarter.”

Because almost all of Altria’s revenue comes from cigarettes, there is a theory that many investors are hesitant to buy its stock for this reason. However, the dividend is a significant incentive to offset that.

There is another reason to invest in Altria. That is the potential danger to the global economy. People typically do not cut back on cigarette smoking in tough economic times. Altria’s dividend won’t go away. Its balance sheet is too solid.

The stock market has become perilous, according to those who believe it has reached its peak. President Trump has threatened to impose high tariffs on imports from several major nations, which could drive up US inflation. His latest threat is a 30% tariff on Mexican imports. Mexico is America’s second-largest trading partner.

An increase in tariffs and the effects on inflation mean American consumers’ buying power will be hit. That, in turn, threatens GDP. Under those circumstances, Altria may be the best stock to own. That is, if people can ignore its business.