2016 was another spectacular year for Altria (MO). The tobacco giant delivered a total shareholder return of 20.5%, which was the fourth year in a row of total shareholder returns above 20%.
Plus, Altria is a dividend growth investor’s dream stock. It is a Dividend Achiever, a group of 272 stocks with 10+ years of consecutive dividend increases.
But actually, Altria’s dividend history is far more impressive than that. It has delivered 50 dividend increases in the past 47 years.
Were it not for various spin-offs over the years, which technically reduced Altria’s dividend, it would be a Dividend Aristocrat.
Altria’s amazing share price and dividend returns are fueled by its highly profitable business model, dominant brand positioning, and strong free cash flow.
The company released fourth-quarter and full-year 2016 financial results on February 1. This article will discuss the results and the company’s future prospects.
Financial Overview
Altria is a consumer staples conglomerate. It has various different product lines, including cigarettes, cigars, chewing tobacco, and wine.
Source: Annual Shareholder Meeting presentation, page 6
Altria generated a massive financial windfall in 2016, when beer giant Anheuser-Busch InBev (BUD) merged with SABMiller plc. Altria had held an approximately 26% stake in SABMiller, and as a result recorded a $13.9 billion gain for its shares.
Altria now has a 9% stake in the combined company, which should continue to add to earnings going forward.
The transaction skewed Altria’s results. Reported earnings-per-share soared 723% to $5.27 in the fourth quarter.
But the company’s core operations are performing strongly as well. Earnings-per-share, as adjusted for one-time items, rose 1.5% to $0.68.
This beat the average analyst estimate, which called for adjusted earnings-per-share of $0.67.
Full-year adjusted earnings-per-share increased 8.2% to $3.03.
Leave A Comment