Each week you'll learn how to be a better dividend investor and follow the journey of a welder with a passion for passive income to $1,000,000 and beyond.
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Moving Beyond A Dividend King.
Published about 1 year ago • 3 min read
Presented By: The Intellectual Investor
Official affiliate partner The Intellectual Investor
Well, we finally did it.
We quit Altria Group (MO) this week when we sold our remaining 100 shares at $44.47 thanks to a covered call that exercised.
That dropped our P.A.D.I. (Projected Annual Dividend Income) by $392.
Ouch.
Altria is a dividend king and has increased its annual dividend for 54 years.
But there's a method to this madness that starts with declining U.S. cigarette sales.
Source: Statista.com
Cigarette sales have dropped over 50% since 2000 and 70% since the early 1980’s.
Smokable tobacco products like Marlboro and Black & Mild make up about 90% of Altria’s net revenue.
But the company is "Moving Beyond Smoking."
Source: Altria.com
Altria says its vision is to "responsibly lead the transition of adult smokers to a smoke-free future."
It's wild that their business is built upon a product with declining demand, and they're shifting away from it.
And it's starting to show.
Source: SimplySafeDividends.com
10Y Total Sales are up 15%, while their shares outstanding have been reduced by 11%.
Source: SimplySafeDividends.com
But Altria's 10Y EPS (Earnings Per Share) is up 91%!
Alex, I'll take Financial Engineers for $400, please.
This is a sign of a well-managed business, but even an all-star management team can only do so much if sales keep declining.
Another concern of mine is the total return.
Author depiction, duh!
Altria underperforms the S&P500 index the more recently we start the clock ticking and only outperforms the past twenty and thirty years.
This could be because we've seen the dot-com crash and the great financial crisis over the last thirty years, keeping those total returns lower.
Oh, and maybe most importantly, my wife and I have lost multiple people to tobacco use.
So, it's a personal choice to no longer individually invest in a business that harms the end user.
Any way you slice or smoke it, losing that fat and juicy dividend stinks.
But we want to be smarter, higher-quality investors and avoid investments just for a significant yield, even though Altria is built to pay one.
Stay tuned to this newsletter to find out where we start redeploying the Altria funds.
Are there any specific stocks or sectors that you invest in?
Hit reply and let me know!
😁THANK YOU to the (12) people who responded to the last newsletter!!
🤑Rick Stambaugh from Orange Mountain Financial brings you ‘Grow Retirement Income.' He’s a seasoned pro with over 30 years in trading and a passion for guiding folks to a prosperous retirement.
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Each week you'll learn how to be a better dividend investor and follow the journey of a welder with a passion for passive income to $1,000,000 and beyond.
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