Altria – Dividend Increase Likely This Week
We believe Altria’s board of directors will undertake its usual review of the dividend
at its late summer meeting and likely announce an increase in the dividend this week.
The company is scheduled to declare its dividend on August 26. You can “set your
watch” to the regularity of Altria’s dividend increases and we do not believe 2021 will
be any different. We expect a roughly 6% increase in the dividend rate –
we believe the quarterly dividend will grow to $0.91, or $3.64 on an annual basis,
reaching a 78% payout ratio (on FY21 EPS). We estimate 6% EPS growth in 2021,
just over 6% EPS growth over the next four quarters, and a dividend payout ratio just
below 80% (target). We believe this strong dividend payout and consistent EPS growth
outlook provide the backdrop for supporting upside for the shares from here. We continue
with our Buy rating.