Altria Stock: Better Than Your Daddy’s Bonds

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The Federal Reserve Board dropped its target federal funds rate to an unprecedented zero amid the 2008 housing bust and credit crisis that roiled financial markets at the time. After, Federal Reserve and Treasury officials were to add Term Asset-Backed Securities Loan Facility (TALF), Troubled Asset Relief Program (TARP), and Operation Twist to the economic lexicon. In summary, government officials have been injecting financial markets with liquidity in order to encourage participants to take out loans, trade securities, and commit to making capital investments. As of March 3, the Federal Reserve balance sheet had bloated to more than $4.2 trillion. Analysts must now acknowledge a new normal.

Stocks that pay hefty dividends, such as Altria (NYSE:MO), are more suitable than bonds for conservative savers in the market for income. In recent years, Altria has consistently offered income yields above 5 percent, while capital appreciation upon the shares has also outpaced the S&P 500 Index. For the sake of comparison, ten and thirty-year Treasury yields stood at a mere 2.60 percent and 3.55 percent as of March 3.

Altria Dividend Projections

Declared Date Record Date Payable Date Amount
05/17/12 06/15/12 07/10/12 $0.41
08/24/12 09/14/12 10/10/12 $0.44
12/12/12 12/26/12 01/10/13 $0.44
02/27/13 03/15/13 04/10/13 $0.44
05/16/13 06/14/13 07/10/13 $0.44
08/23/13 09/16/13 10/10/13 $0.48
12/11/13 12/26/13 01/10/14 $0.48
02/26/14 03/14/14 04/10/14 $0.48 (Projection)
05/14/14 06/16/14 07/10/14 $0.48 (Projection)
08/21/14 09/15/14 10/10/14 $0.53 (Projection)

Source: Altria Investors — Stock & Dividend Information

On July 10, 2012, Altria paid out its fourth 41-cent quarterly dividend over the past 52-week period. At the time, Altria shares changed hands at $32.78, while offering 5.00 percent in dividend yield. Over the course of the next two years, Altria investors were to receive 44-cent and 48-cent per share dividends on a quarterly basis. Altria stock closed out the March 12 trading session at $36.14 per share, which also calculated out to a 5.31 percent dividend yield. Altria shareholders who bought in at $32.00 in 2012 would now be raking in an effective 6.00 percent yield upon the initial investment. Altria did trade for $24.00, as recently as March 2011. Altria investors who held on for the past three years may be banking 8 percent yields upon these shares.

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