Altria Group, Inc.
Consumer Staples · Tobacco
Structural: U.S. tobacco duopoly with $BTI; Marlboro holds ~42% U.S. cigarette retail share, giving Altria pricing power that has offset ~2-3% annual volume declines for two decades. Capital return is the entire equity story - ~8% dividend yield, ~50yr dividend-raise streak (Dividend King), and ongoing buyback.
- Pricing power on Marlboro absorbs volume decline; net revenue per stick still rising
- NJOY acquisition (2024, $2.75B) gives FDA-authorized pod e-vapor platform vs illicit disposables
- on! oral nicotine pouches scaling fast (low base, growing share vs $PM Zyn)
- ABI residual stake (~8%) = optionable non-core asset; partial monetizations fund buybacks
- Dividend + buyback yield ~10% - capital-return floor under the multiple
- U.S. cigarette volumes declining 8-10% YoY in 2024-2025, accelerating vs historical 2-3%
- Illicit disposable vapes ($ELF Bar et al) eat share faster than NJOY can grow
- FDA menthol ban (delayed but pending) would hit ~25% of Marlboro mix
- JUUL write-down (~$12.5B cumulative) is a recent reminder that RRP M&A is not free
- ESG/index exclusion caps the institutional buyer base - multiple compression risk
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