One of These Dividend Kings Pays Out More Than It Earns. Which Dividend Is Safer?
Two Dividend Kings with 50-plus years of consecutive raises have reported earnings, and one of them is funding its payout in a way that should raise eyebrows. The question is whether that really makes it the riskier bet.
Altria (NYSE:MO | MO Price Prediction) and Colgate-Palmolive (NYSE:CL) both belong to the small club of consumer-staples payers that keep hiking every year. A Dividend King is a company with a half-century of annual increases. Both companies recently reported quarterly results, and both have raised their payouts. Yet one funds its checks in a way that looks far riskier on paper. Which payout actually stands on thinner ice?
Altria traded at $70.03 in premarket on September 17, up 21.6% year to date. Colgate was last seen at $87.50, up 10.1%.
Altria Turns Cigarettes Into Cash, Then Sends It All Out
Altria’s smokeable engine is a cash printer. FY2025 operating cash flow reached $9.29 billion against capital expenditures of just $216 million. It paid $6.96 billion in dividends against reported net income of $6.947 billion. On a GAAP basis for fiscal 2025, Altria distributed slightly more than it earned, weighed by the $2.2 billion NJOY impairment. Cash coverage is wide. Earnings coverage is tight.
The balance sheet shows the tradeoff. Shareholders’ equity is negative $3.211 billion, a result of years of buybacks rather than operating losses. CFO Heather Newman told investors: “We remain committed to returning significant value to shareholders.” Debt-to-EBITDA stands at 1.9 times.
Colgate Covers Its Payout Twice Over, but Earnings Wobbled
Colgate generated FY2025 operating cash flow of $4.198 billion, spent $564 million on capex, and paid $1.823 billion in dividends against net income of $2.132 billion. Both earnings and free cash flow clear the dividend with room to spare. Shareholders’ equity remains positive at $236 million—thin, but above zero.
The wrinkle: Q4 2025 net income came in at negative $37 million, dragged by a Filorga goodwill charge, and FY2025 net income fell below FY2024’s $2.889 billion. CEO Noel Wallace said, “Free cash flow up 18% and we’ve returned $1.4 billion to shareholders.”
Durability, Line by Line (FY2025)
| Metric | Altria | Colgate |
|---|---|---|
| Operating cash flow | $9.29B | $4.19B |
| Capex | $216M | $564M |
| Dividends paid | $6.96B | $1.82B |
| Net income | $6.95B | $2.13B |
| Shareholders’ equity | −$3.21B | $236M |
Total Return Cuts Against the Intuition
The riskier-looking balance sheet has been the winner. Altria returned 112.7% over five years and 123.1% over ten. Colgate returned 29.7% and 54.5% across the same windows. The market is pricing Altria’s cash yield above its structural volume decline, and pricing Colgate’s slower earnings for what it is.
What Would Pressure Each Payout
For Altria, watch whether smokeable pricing continues to offset volume declines. Cigarette shipments fell 3.2% in Q2, with price realization of 4.5%. If price stops covering the volume slide, cash coverage narrows fast. For Colgate, watch North America organic sales, which fell 3.0% in Q2 2026, and further Filorga writedowns.
Why Colgate’s Payout Rests on Firmer Ground
Both dividends are currently funded. A retiree focused on durability will lean toward Colgate: earnings and cash flow both cover the check, equity is positive, and the business spans four categories across five geographies. Altria suits the yield-hungry investor who is comfortable with a shrinking end market and a persistently negative book value.
On the specific question the headline poses, Altria is the one paying out more than it earns on a GAAP basis for FY2025—and that is the payout standing on thinner ice. (For a broader shortlist screened the same way, see ten Dividend Kings ranked by valuation in a free report here.)
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Trey has been an editor and author at 24/7 Wall St. for more than a decade, where he has published thousands of articles analyzing corporate earnings, dividend stocks, short interest, insider buying, private equity, and market trends. His comprehensive coverage spans the full spectrum of financial markets, from blue-chip stalwarts to emerging growth companies.
Beyond 24/7 Wall St., Trey has created and edited financial content for Benzinga and AOL's BloggingStocks, contributing additional hundreds of articles to the investment community.
Trey's editorial expertise extends across multiple publishing environments. He served as production editor at Dearborn Financial Publishing and development editor at Kaplan, where he helped shape financial education materials. Earlier in his career, he worked as a writer-producer at SVE. His freelance editing portfolio includes work for prestigious clients such as Sage Publications, Rand McNally, the Institute for Supply Management, the American Library Association, Eggplant Literary Productions, and Spiegel.
Outside of financial journalism, Trey writes fiction and has been an active member of the writing community for years, moderating workshop sessions at regional conventions.
