Witnessing a steady flow of passive income surging into your investment account is a feeling akin to enjoying a delicious warm cup of coffee on a brisk autumn morning. And the icing on the cake? With the recent abolishment of transaction fees by brokerages, investing a modest sum of less than $100 can now pave the way for quarterly payments from two iconic dividend payers in the market.
As of now, Altria Group (NYSE: MO), and Pfizer (NYSE: PFE) boast remarkable dividend yields of 9.1% and 6.1%, respectively. These figures outshine the typical 1.35% yield one would receive from the average stock in the renowned S&P 500 index.
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High dividend yields often indicate a lack of faith from the market in a company’s potential for future growth. However, in the case of Altria Group and Pfizer, these dividends not only kick off impressively but also hold promise for steady growth throughout one’s golden years.
The Smoking Hot Altria Group
Altria Group stands tall as the tobacco titan responsible for the iconic Marlboro brand in the United States. Last August, the company raised its dividend for the 58th time in 54 years, underscoring its commitment to increasing payouts annually by a mid-single-digit percentage.
Despite plans for consistent dividend growth, Altria’s stock boasts a substantial 9.1% yield. The stock price faces pressure due to concerns regarding the decline in traditional cigarette sales and increasing competitive threats from an illicit e-vapor market circumventing the U.S. Food and Drug Administration’s flavor ban.
In 2023, Altria reported an 8.8% decline in Marlboro shipments. Nevertheless, the company managed to offset this volume drop through price hikes on premium brands and a rise in non-combustible product sales, resulting in a mere 0.9% dip in revenue net of excise taxes last year.
Although Altria’s revenue faced a contraction, diligent cost management along with a decrease in the share count led to a 2.3% increase in adjusted earnings per share in the previous year. Furthermore, Altria’s acquisition of NJOY, a FDA-approved e-cigarette product, in 2023 indicates a positive trajectory amidst concerns over illicit e-vapor competition.
The Pharmaceutical Powerhouse: Pfizer
Pfizer underwent a spin-off of its established medicines division in 2020, transforming itself into the leading purveyor of innovative drugs with patent-protected market dominance. At present prices, the stock boasts an enticing 6.1% yield.
Since 2009, Pfizer has elevated its dividend payout annually. However, recent years have seen a tepid growth rate, witnessing only a 16.7% increase since 2020.
The stock faced a 38% decline since the onset of 2023 primarily due to the rapid decline in COVID-19 product sales. Excluding these sales, Pfizer recorded a robust 7% revenue surge last year, attributed to new product launches and expanded applications for existing products.
Amidst the pharmaceutical industry’s intricate dynamics, Pfizer encountered a decline in revenue from Xeljanz while witnessing a surge in sales of Vyndaqel, a rare heart disease drug. Sales of Vyndaqel surged by 36% to $3.3 billion in 2023, with potential blockbuster drugs awaiting FDA approval in the pipeline.
Snapping up a few shares of Pfizer now for a long-term investment appears prudent for investors seeking to fortify their passive income flows.
Should you invest in Altria Group right now?
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Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Pfizer. The Motley Fool has a disclosure policy.
The sentiments expressed by the author in this content are personal opinions and do not necessarily align with those of Nasdaq, Inc.
