What they do

Altria Group, Inc. (MO:NYSE) operates as a holding company, which engages in the manufacture and sale of cigarettes in the United States. It operates through the following segments: Smokeable Products, Oral tobacco products and Wine. The Smokeable Products segment consists of cigarettes manufactured and sold by PM USA, machine-made large cigars and pipe tobacco manufactured and sold by Middleton. The Oral tobacco products segment is primarily moist smokeless tobacco products (MSTs) through brands like Copenhagen and Skoal as well as oral nicotine pouches sold by Helix. The Wine segment, through subsidiary Ste. Michelle Wine Estates Ltd, produces Washington State wines, primarily Chateau Ste. Michelle and 14 Hands. The group also owns wineries / distributes wines from several other wine regions. The company was founded in 1919 and is headquartered in Richmond, VA.

At Theta Bandits, where short-term trades usually take the spotlight, today’s focus shifts to a more long-term investment strategy centered around growing wealth through Dividends versus Price Action.

Opinion

Last week on January 9^th, 2024 Altria Group, Inc. (MO:NYSE) distributed its quarterly dividend of $0.98 / share, reflecting an approximate 9.48% yield. A common phenomenon post-dividend payout is a minor pullback in the stock price. Given the dividend payout percentage is relatively high, this means we are giving up some price action – as you can see the 12-month Price Target (PT) is only $46.91 which is a 13.47% gain from current levels. This high dividend percentage also leans the stock more toward a defensive category and like other stocks with high dividends have suffered from the high interest rates over the past year. Coupled with a consistently increasing dividend, any potential Federal Reserve rate cuts are anticipated to propel the stock price upward, offering both dividends and price appreciation in the coming years.

Plan

As always, please refer to the visual roadmap included below. As we are in pursuit of the dividend, we should be looking to identify weakness in the stock and using that well known expression “buy the dips”. Highlighted in white, both the price trend down and potential recovery are shown. In blue we show the expected volatility in the white triangle before a potential upward price movement. In orange support/resistance line suggests a potential buy price of $40.93, although with the volatility we might get a bit better fill.

Trading:

For trading the price action, the potential support / resistance zones for securing profit are marked at $42.31, $43.97, $45.17, $46.02 and $46.91 (PT). Any value above this point is gravy as the stock is fully values, but there definitely could be a potential move higher.

Dividends:

As the point of today’s article revolves around dividends – the purchased shares should be held until the next ex-dividend date to qualify for payment. As per the dividend payout schedule shown, expect at least 2 more payments at $0.98/share and then a potential increase in the dividend price.

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RISKS

This trade is a long-term investment, while dividends contribute to earnings it’s crucial to review the information for dividend payouts and cross reference with price action volatility. Should the price depreciate and dividend payments fail to offset the gap, reallocating funds to the next opportunity would be the wisest course of action.

Disclaimer: This article is for informational and educational purposes only, not investment advice. We recommend researching and consulting with a financial advisor before making investment decisions. All actions based on this information are at your own risk.