PM vs. MO: Which Tobacco Dividend to Trust for the Next Decade
Both tobacco giants just raised their dividends and both stocks are up over 28% this year, but the one paying nearly twice the yield may actually be the riskier bet for retirees building income over the next decade.
Philip Morris International (NYSE:PM | PM Price Prediction) or Altria (NYSE:MO): which tobacco dividend holds up better for retirement-focused income right now? Both companies just raised their payouts. Altria declared a $1.11 quarterly dividend on August 27, and Philip Morris followed with $1.60 on September 18. Both stocks have rallied this year, with Philip Morris up 28.69% and Altria up 30.35%. The answer comes down to where each company sells and what it sells.
Yield and Safety: Altria Pays Nearly Twice as Much Today
At $71.68, Altria’s $4.44 forward dividend yields about 6.2%. Philip Morris yields about 3.2% on a $6.40 forward payout at $201.18. Coverage is nearly identical. Altria’s forward dividend equals roughly 79% of the low end of its 2026 adjusted EPS guidance of $5.61 to $5.72. Philip Morris sits near 77% of its $8.26 to $8.41 range.
Altria carries less leverage, at 1.9 times debt-to-EBITDA. Philip Morris holds $43.1 billion in net debt at 2.35x adjusted EBITDA and is aiming about 2.0x by year-end. Winner: Altria, on yield and balance sheet.
Dividend Growth: Philip Morris Is Raising Faster
Philip Morris’s latest increase lifted the quarterly payment from $1.47 to $1.60, about 8.8%, on top of an 8.9% raise the year before. Altria moved from $1.06 to $1.11, roughly 4.7%. Both records are durable. Altria’s August 2025 raise was its 60th increase in 56 years, and its payment history shows a higher dividend every year since 2009. Philip Morris has raised every year since 2008, from $0.46 a quarter.
Sustainability favors Philip Morris. With payouts near 80% of earnings, dividends can only grow as fast as profits. Philip Morris guides to 9.5%-11.5% adjusted EPS growth this year and aiming a 9-11% annual pace through 2028. Altria guides to 3.5%-5.5%, and part of that comes from buybacks, with $665M left on an authorization expiring Dec 31, 2026. Winner: Philip Morris.
Business Durability: Growing Volumes Beat Price Hikes on a Shrinking Base
International markets supplied 93% of Philip Morris’s first-half net revenue, and smoke-free products now make up about 41.5% of sales. Second-quarter revenue grew 10.4% to $11.19B, VEEV shipments rose 55.1%, and IQOS holds about 76% of the global heat-not-burn category. EPS has beaten estimates for 5 consecutive quarters.
Altria shows where the pricing playbook runs out. Domestic cigarette shipments fell 3.2%, and management estimated industry volumes fell 5% after adjustments. Price realization of 4.5% barely outpaced that decline, while discount share gained 2.6 share points and Marlboro slipped to 39.5%. Each price rise drives more smokers toward cheaper brands. Revenue grew just 1.3%, and adjusted EPS of $1.48 came in below the $1.50 consensus.
Each company faces one specific risk. For Philip Morris, it is regulation: Japan’s excise increase and Poland’s flavor ban held quarterly IQOS growth to 5%. For Altria, it is litigation: an ITC patent exclusion order keeps NJOY ACE off shelves in 2026, after $2.2B in e-vapor impairments in 2025. Over 10 years, Philip Morris shares rose 245.68% against 130.66% for Altria, with a lower beta of 0.36 versus 0.461. Winner: Philip Morris.
Verdict: Philip Morris Is the Better Retirement Dividend
Philip Morris wins two of three dimensions and takes the overall answer. Its forward P/E of 21 is well above Altria’s 12, and the premium buys a payout funded by growing volumes. Altria’s higher yield is compensation for a domestic business losing volume every year. Analysts seem to see it the same way: Altria’s average price target of $70 sits below its current price.
Altria makes sense for one profile: a retiree who needs the most cash possible today and accepts slow dividend growth. Altria’s role in an income portfolio centers on current income. For an investor with a decade or more of retirement ahead, Philip Morris offers the stronger dividend-growth profile (we ranked ten long-tenured dividend growers by valuation in a free Dividend Kings report you can grab here).
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
