Smart Dividend Portfolio Edition #90: Income Ignition
1
Dear Investor,
Welcome to the 90th edition of TipRanks’ Smart Dividend Portfolio & Newsletter.
1
1
Market-Moving News: Dec 08, 2025
U.S. stocks ended the week higher as investors reacted to cooler inflation data and growing confidence in a Federal Reserve rate cut this month. The S&P 500 (SPX) gained 0.19%, the Nasdaq 100 (NDX) advanced 0.43%, and the Dow Jones Industrial Average (DJIA) added 0.22%. The 10-year Treasury yield rose to 4.14%, while gold (XAUUSD) closed the week at $4,197.81. Meanwhile, oil (CL) declined 0.99% to $60.19 a barrel.
The economy continues to show steady but uneven strength. The Federal Funds Rate dropped to 3.88%, while the inflation rate edged up to 3.01%. Unemployment rose slightly to 4.40%, and real GDP growth held firm at 3.80%. Retail sales remained flat at 0.07%, signaling slower spending into the holiday season.
The main story, which dominated headlines over the weekend, came from Hollywood: Netflix (NFLX) sealed a landmark $72 billion deal to acquire Warner Bros. Discovery’s (WBD) studio and HBO Max, marking one of the biggest shake-ups in media history. The sale, priced at $27.75 per share, will see Warner Bros. Discovery spin off its TV networks, including CNN and TNT Sports, before the deal closes.
The transaction more than doubled WBD’s share price since September, restoring investor confidence and handing CEO David Zaslav a massive payday estimated at over $650 million from shares and stock options. The announcement capped a remarkable turnaround for the company, which had struggled since its 2022 merger with WarnerMedia.
Meanwhile, Paramount Skydance (PSKY) is weighing a hostile bid after losing out to Netflix. CEO David Ellison has claimed that his $30-per-share all-cash offer would deliver greater value and face fewer regulatory hurdles. Despite that, Netflix’s structured offer and higher breakup fee won the board’s favor, giving the streaming leader more content firepower just as global competition tightens.
1
1
1
This Week’s Quality Dividend Stock Idea
Altria Group (MO) is a U.S.-based consumer goods company that manufactures and distributes tobacco and nicotine products. Its portfolio spans cigarettes, smokeless tobacco, oral nicotine pouches, and an expanding range of heated tobacco and other reduced-risk alternatives. As one of the largest tobacco companies in the country, Altria leverages its established brands and nationwide distribution to compete effectively in a tightly regulated industry.
1
Portfolio Pivot
Altria’s history traces back to 1847, when Philip Morris opened a tobacco shop in London, laying the foundation for a business that would later grow into Philip Morris USA and dominate the U.S. cigarette market through the Marlboro brand. By 1985, the company had expanded well beyond tobacco and adopted the name Philip Morris Companies, but rising global regulatory pressure in the 2000s prompted major restructuring. In 2003, it rebranded as Altria Group to create a broader corporate identity, and over the next several years, the company sharpened its focus on the U.S. market, where its cigarette leadership and disciplined pricing supported a durable earnings base. In 2008, Altria decided to spin off its international operations. This spin-off created Philip Morris International (PM), as an independent entity, which sells cigarettes and other combustible tobacco products exclusively outside the U.S.
A key milestone came in 2009 with the acquisition of UST, the owner of Copenhagen and Skoal, which gave Altria more than 50% share of the moist smokeless tobacco category and strengthened cash flow with a second profit engine beyond cigarettes. As consumer preferences and regulations shifted, the company built on this foundation through targeted investments in smoke-free products. Beginning in 2018, it accelerated this strategy by taking a 35% stake in JUUL Labs, acquiring a 45% stake in cannabis company Cronos Group, and purchasing a stake in Burger Söhne Holding (later Helix Innovations), adding the On! nicotine pouch brand to its portfolio.
Altria continued to refine its portfolio through strategic exits and new acquisitions. It divested its wine business in 2021 by selling Ste. Michelle Wine Estates, and then advanced its smoke-free transition in 2023 through the acquisition of NJOY Holdings, securing a fully owned, FDA-authorized e-vapor platform. That same year, it formed Horizon Innovations, a joint venture with Japan Tobacco, to commercialize heated tobacco products in the United States. Altria still holds an 8.1% stake in Anheuser-Busch InBev (ABI), trimmed from about 10% after selling 35 million shares in March 2024 for roughly $2.4 billion to fund buybacks. The stake was built in 2016 during ABI’s acquisition of SABMiller, where Altria had been a major shareholder. This investment continues to provide meaningful income, strengthening Altria’s balance sheet.
Taken together, these moves chart Altria’s long-running evolution from a traditional cigarette manufacturer into a diversified nicotine company, balancing its premium combustible franchise with growing positions in oral tobacco, e-vapor, cannabis, and emerging smoke-free technologies to support long-term earnings resilience and future growth.
1
Nicotine Nexus
Altria’s business model centers on a portfolio of leading tobacco and nicotine brands that generate steady cash flow through strong market positions, disciplined pricing, and premium products. Its operations are organized into two core segments, Smokeable Products and Oral Tobacco Products, supported by an Emerging Products platform that reflects its long-term transition toward smoke-free alternatives. This structure enables Altria to run a concentrated, highly cash-generative business anchored in categories with durable consumer demand. In 2023, Altria unveiled its enterprise goals for 2028, outlining plans to deliver mid-single-digit adjusted EPS growth, maintain U.S. tobacco leadership with a total adjusted operating income before general corporate expenses and amortization of intangibles (OCI) margin of at least 60% annually, and uphold strong profitability while expanding its smoke-free portfolio. Looking ahead, the company aims to build an international presence in innovative oral tobacco, advance heated tobacco and e-vapor pathways, and introduce at least five non-nicotine products by 2028.
The Smokeable Products segment, led by Marlboro, the largest cigarette brand in the United States, remains the company’s primary earnings driver. Altria sells cigarettes and cigars to wholesalers and retailers, benefiting from high brand loyalty, efficient distribution, and the ability to raise prices even as industry volumes decline. These pricing gains, combined with strict cost discipline, have supported stable revenue and strong operating income despite long-term reductions in cigarette consumption.
The Oral Tobacco Products segment provides a growing second profit engine through Copenhagen, Skoal, and the On! nicotine pouch brand. This portfolio positions Altria in faster-growing, higher-margin categories increasingly favored by adults seeking smoke-free alternatives, helping diversify the company’s earnings base toward a more resilient and future-oriented mix.
Altria is also investing in emerging nicotine platforms to reinforce long-term growth potential. The acquisition of NJOY brought a fully owned, FDA-authorized e-vapor portfolio, giving the company greater control over product development, distribution, and commercialization. Its Horizon Innovations joint venture with Japan Tobacco has submitted major FDA applications for the Ploom, a heat-not-burn (HNB) device that heats tobacco rather than burning it, producing a nicotine-containing aerosol instead of smoke, as well as for Marlboro heated tobacco sticks. These filings establish a potential pathway for Altria to enter the U.S. heated tobacco market, which could represent a significant long-term growth opportunity.
1
Growth Blend
The broader regulatory backdrop is becoming more supportive of compliant smoke-free innovation. Recent FDA actions, including the oral nicotine Premarket Tobacco Product Application (PMTA) pilot program1 and increased enforcement against illicit vapor products, are improving predictability for legally marketed smoke-free offerings. Within this environment, Altria’s On! brand strengthened its position in the fast-growing modern oral category. Despite heavy discounting across the industry, On! delivered 15% year-to-date volume growth and increased market share. The brand also demonstrated pricing power, raising prices by 1.5% even as competitors cut prices, which supported profitability and contributed to margin expansion in the oral tobacco segment. Altria also began rolling out On! PLUS, a next-generation pouch with stronger consumer appeal and more flavors in development. Because On! PLUS participates in the FDA’s new PMTA pilot program, future product iterations may advance through the regulatory process more quickly.
Altria’s smoke-free strategy is further supported by its collaboration with KT&G, a South Korean tobacco firm, which provides access to global manufacturing scale, advanced flavor-development capabilities through its stake in Another Snus Factory (maker of the smoke-free oral nicotine LOOP brand), and opportunities in international modern oral markets as well as U.S. non-nicotine wellness categories. The partnership also offers potential manufacturing efficiencies within Altria’s traditional tobacco operations, enhancing long-term margin potential.
Altria continues to build its regulated vapor platform through NJOY, the only major U.S. pod-based e-vapor system with multiple FDA authorizations. The company has redesigned the NJOY ACE device to navigate ongoing patent disputes and is evaluating regulatory pathways for the updated version. Altria’s patent litigation with JUUL centers on claims that JUUL’s pod-based vaping technology infringes Altria’s intellectual property tied to the redesigned NJOY ACE device, a dispute that may delay a full relaunch of the updated system until at least 2027. Even as this litigation continues, the vapor category includes roughly 21 million adult users, and stepped-up federal enforcement, including the seizure of more than 4 million unauthorized devices, supports compliant manufacturers like Altria and underscores the need for continued oversight.
Together, these initiatives reflect a coordinated effort to reposition Altria for a multi-category future. By expanding its oral nicotine portfolio, advancing heated tobacco applications, stabilizing its regulated vapor platform, strengthening international partnerships, and operating within a more predictable regulatory framework, Altria is building a broader smoke-free portfolio designed to support long-term earnings durability and future growth.
—
1-The FDA’s PMTA pilot program for oral nicotine pouches is a streamlined review pathway designed to speed up the evaluation of high-volume products that already have substantial scientific data behind them. The program provides clearer guidance, faster feedback cycles, and more predictable timelines, allowing compliant manufacturers like Altria to move innovations such as on! PLUS through the regulatory process more efficiently.
1
Smoke-Free Edge
Over the past three years, Altria has faced modest top-line pressure, with revenues contracting by about 1%, reflecting the structural decline in cigarette volumes. Even so, diluted EPS has grown at a strong 26.6% CAGR, supported by disciplined pricing, cost efficiencies, and consistent buybacks that have helped offset industry headwinds.
Altria’s third-quarter performance continued this pattern of stable earnings growth despite softer volumes. Revenues net of excise taxes fell 1.7% year-over-year to $5.3 billion, slightly below expectations, primarily due to lower shipments across its major categories. Yet adjusted diluted EPS rose 3.6% to $1.45, above consensus, and increased 5.9% over the first nine months of the year, highlighting the company’s resilience as it executes its smoke-free transition.
Smokeable products remained the backbone of the business, generating roughly 87% of total revenue. Adjusted OCI income grew 0.7% in the quarter to nearly $3 billion and climbed 2.5% year-to-date to $8.4 billion. Margin performance was a key strength: segment margins expanded to 64.4% in both the quarter and year-to-date periods, improving 1.3 and 2.7 percentage points, respectively. Cigarette volumes declined 8.2% in the quarter, and 10.6% year-to-date, consistent with long-term trends, and Altria reinforced Marlboro’s leadership in the premium tier, where the brand held around a 60% share. Overall cigarette retail share increased to 45.4%, supported by gains in both premium and discount offerings.
The oral tobacco products segment delivered steady contributions as well. Adjusted OCI was roughly unchanged in the quarter but rose 3.3% year-to-date, while margins expanded to more than 69% for both periods. Although reported shipment volumes declined, adjusted declines were more moderate as category mix shifted toward modern oral products, particularly the on! brand. Retail share across oral tobacco remained firm, with Copenhagen maintaining its leadership in moist smokeless tobacco.
Beyond tobacco, Altria benefited from its investment in Anheuser-Busch InBev, generating $157 million in equity income during the quarter, an increase of 9% from the year before.
Following these results, the company raised the lower end of its full-year guidance and now expects adjusted diluted EPS of $5.41 at the midpoint, up 4.3% year-over-year. Management noted that fourth-quarter EPS growth will moderate due to the impact of last year’s accelerated share repurchase and the expiration of a legal settlement fund that benefited results in the prior year. Consumer spending trends remain a key watch point as inflation continues to influence purchasing behavior.
Altria’s balance sheet remained sound, with a debt-to-EBITDA ratio of 2x, higher than the industry median of 1.2x due to its aggressive buybacks and elevated dividend payouts, which prioritize returning capital to shareholders over rapid deleveraging. The company maintains investment-grade ratings of “BBB” from Fitch and “BBB+” from S&P Global. As of September 30, 2025, Altria held $3.5 billion in cash and cash equivalents and generated about $6 billion in operating cash flow, providing ample flexibility to support both investment needs and shareholder returns.
1
Dividend Power
Altria’s long-standing commitment to shareholder returns is reflected in its more than five decades of consecutive dividend increases, a record that places the company firmly among Dividend Aristocrats. The company distributes 76.2% of its adjusted earnings to shareholders, and its dividend yield of 6.97%, nearly three times the consumer defensive sector average of 2.4%, reinforces its role as a high-income stock. Altria plans to grow its dividend per share at a mid-single-digit rate annually through 2028, aligning its payout strategy with long-term earnings growth.
In the third quarter, Altria increased its dividend by 3.9% to $1.06 per share, marking the 60th dividend raise in 56 years. Year-to-date, the company has returned roughly $6 billion to investors, including about $5.2 billion in dividends and $712 million in share repurchases. Altria also expanded its share repurchase authorization from $1 billion to $2 billion, effective through 2026, reinforcing its continued focus on shareholder returns.
Altria’s stock has risen modestly over the past year, primarily driven by strong dividends and its share repurchase program. Further support came from growth in smoke-free products like On!, resilient Marlboro pricing, and robust annual cash flows. The stock sits more than 7% above its long-term historical averages on key measures such as non-GAAP trailing and forward P/E, forward EV/EBITDA, and forward price-to-cash-flow ratios. This signals that the market is willing to place a modest premium on Altria’s stable cash flow and predictable earnings base. Yet relative to major global competitors like British American Tobacco and Philip Morris International, Altria trades at the lower end of the peer valuation range, particularly on forward P/E and both trailing and forward EV/EBITDA. This combination, priced above its own historical averages but below comparable peers, suggests the stock may still offer value for investors seeking income-oriented exposure with a more moderate valuation backdrop.
Analysts remain optimistic about MO as the company’s expanded partnership with KT&G positions the company to tap into international smoke-free and non-nicotine markets, creating a new avenue for revenue and profit growth that is fully incremental to its existing U.S.-focused business. Combined with Altria’s strong balance sheet, disciplined capital allocation, and ongoing share repurchase program, this strategic expansion supports a balanced risk–reward profile with limited downside for long-term investors.
Consensus estimates point to roughly 12% upside from current share levels, with some analysts projecting gains of up to 23%. A discounted cash flow analysis provides additional support for this view, suggesting the stock may be trading at an approximately 44% discount to its intrinsic value.
1
Investing Takeaway
Altria stands out as a compelling income-focused investment, underpinned by its long history of reliable dividend growth and shareholder returns. The company’s disciplined cash flow generation across both smokeable and oral tobacco products, coupled with expanding positions in smoke-free alternatives, supports a robust and predictable payout framework. Its commitment to consistently returning capital, through both dividends and share repurchases, reinforces the stock’s appeal for investors seeking steady income. Altria’s strategy of balancing a premium cigarette franchise with higher-margin oral and vapor products positions it to maintain resilient earnings even amid declining cigarette volumes, further underpinning dividend sustainability. With a track record spanning decades and a forward-looking approach that includes growth in smoke-free and non-nicotine segments, the company offers investors the dual benefit of income reliability and potential for incremental capital appreciation, making it a core option for dividend-oriented portfolios.
1
Dividend Investor Portfolio
1
Portfolio News
▣ The ex-dividend date for Automatic Data Processing (ADP) is December 12 with a payment date of January 1, 2026.
▣ Bank of Nova Scotia (BNS) reported a stronger-than-expected fourth quarter, delivering adjusted EPS of $1.40 and revenue of $7.09 billion, both ahead of consensus estimates. The quarter’s performance reflected solid momentum across its capital markets and wealth-management businesses, where higher fee income and improved net interest income supported growth despite a mixed economic backdrop. Management also reaffirmed the bank’s commitment to shareholder returns by declaring a quarterly dividend of $0.80 per share, extending its long-standing track record of consistent payouts. Overall, the results underscored BNS’s ability to stabilize earnings and strengthen core operations heading into the next fiscal year.
▣ ExxonMobil (XOM) is reportedly in talks with the Iraqi oil ministry to acquire the 75% operational stake held by Lukoil in the giant West Qurna‑2 oilfield, one of the world’s largest, producing roughly 470,000 barrels per day and accounting for around 9% of Iraq’s total oil output.
At the same time, Exxon plans to permanently shut down one of its two steam crackers on Singapore’s Jurong Island starting March 2026, citing global petrochemical oversupply and shifting demand. These moves illustrate Exxon’s dual strategy: re-entering the Iraqi upstream sector for growth while streamlining petrochemical operations in response to global market headwinds.
▣ IBM (IBM) is reportedly in advanced talks to acquire Confluent, a data infrastructure company, for about $11 billion. If completed, this would rank among IBM’s largest acquisitions in recent years and underscores its push to strengthen cloud and real-time data capabilities, which are critical for enterprise AI and hybrid-cloud offerings.
This move reflects IBM’s strategic shift under CEO Arvind Krishna toward software, cloud services, and AI infrastructure, building on its 2024 purchase of HashiCorp, and aims to position the company more competitively in a fast-growing data-driven market.
▣ Kroger (KR) reported mixed third-quarter results on December 4. While the retailer reported adjusted EPS of $1.05, above consensus estimates, total sales remained steady at $33.9 billion despite a softer consumer backdrop, but fell short of Street forecasts. The standout performance came from its digital business, where e-commerce sales jumped 17% as more customers shifted to online ordering and rapid delivery. Kroger also detailed the next phase of its e-commerce reset, noting that the closure of underperforming automated warehouses and expanded partnerships with Instacart, DoorDash, and Uber Eats are reshaping its fulfilment network. Management expects these changes to streamline costs and improve order efficiency, ultimately generating roughly $400 million in additional e-commerce operating profit in 2026 as the business becomes more scalable and demand aligns with its revamped digital model.
▣ Lockheed Martin (LMT) expanded its hypersonics footprint this week with the opening of a new systems integration lab at its Huntsville campus, marking another step in the company’s push into next-generation defense technologies. The 17,000-square-foot facility will serve as a hub for integrating and testing advanced hypersonic weapons, an area of growing strategic priority for both the company and the U.S. military. The lab is one component of Lockheed Martin’s broader $529 million capital investment plan in Alabama, which is aimed at strengthening its research, development, and production capabilities across high-speed weapons programs.
▣ PepsiCo (PEP) is reportedly close to reaching a settlement with activist investor Elliott Investment Management, which acquired a roughly $4 billion stake in the company earlier this year. Elliott has been advocating for strategic changes aimed at strengthening PepsiCo’s soda segment and enhancing overall shareholder value. The discussions have been described as “constructive,” though the specific terms of any potential agreement remain confidential.
If finalized, the settlement could have significant implications for PepsiCo’s strategic direction, potentially influencing its product mix, operational priorities, and long-term growth plans. Investors are likely to view the outcome as an important signal of how the company balances activist input with its broader portfolio strategy.
Separately, PepsiCo’s ex-dividend date is December 9, with a payment date of January 6, 2026.
▣ Qualcomm’s (QCOM) ex-dividend date is December 08 with a payment date of December 22.
1
Recent Trades
None at the moment, although we are considering adding a stock to our portfolio when the market conditions allow for an attractive entry point. Stay tuned.
1
1
Portfolio Attributes
| Dividend Portfolio Yield |
Expected Dividend Growth | Expected Annual Income |
| 3.98% | +5.77% | $5,929.82 |
| Yield-on-Cost Adjusted, Weighted |
Average Analyst 12-Month Growth Outlook | 10K Per Stock at the Time of Purchase |
Current Portfolio
| Name | EX-Dividend Date | Payment Date | Yield on Cost | Annual DPS |
| Automatic Data Processing (ADP) | Mar 17, 2026 | Apr 02, 2026 | 2.46% | $6.80 |
| Amgen (AMGN) | Feb 17, 2026 | Mar 10, 2026 | 3.27% | $9.52 |
| BlackRock (BLK) | Mar 09, 2026 | Mar 24, 2026 | 2.61% | $20.84 |
| Bank of Nova Scotia (BNS) | Jan 07, 2026 | Jan 29, 2026 | 5.98% | $3.21 |
| EOG Resources (EOG) | Jan 16, 2026 | Jan 30, 2026 | 3.06% | $4.08 |
| ExxonMobil (XOM) | Feb 12, 2026 | Mar 10, 2026 | 3.64% | $4.12 |
| IBM (IBM) | Feb 10, 2026 | Mar 10, 2026 | 3.14% | $6.72 |
| JPMorgan Chase (JPM) | Jan 06, 2026 | Jan 29, 2026 | 3.43% | $6.00 |
| Kroger (KR) | Feb 17, 2026 | Mar 03, 2026 | 3.08% | $1.40 |
| Lockheed Martin (LMT) | Mar 03, 2026 | Mar 30, 2026 | 2.85% | $13.80 |
| PepsiCo (PEP) | Mar 10, 2026 | Mar 31, 2026 | 3.8% | $5.69 |
| Philip Morris (PM) | Dec 26, 2025 | Jan 13, 2026 | 6.06% | $5.88 |
| Qualcomm (QCOM) | Mar 05, 2026 | Mar 26, 2026 | 2.36% | $3.56 |
| VICI Properties (VICI) | Dec 17, 2025 | Jan 09, 2026 | 5.22% | $1.8 |
| Verizon (VZ) | Jan 12, 2026 | Feb 03, 2026 | 6.09% | $2.76 |
NameEX-Dividend DatePayment DateYield on Cost Annual DPS
1
1
1
Click here for more stock market analysis from TipRanks Macro & Markets research analyst Yulia Vaiman
1
Disclaimer
The information contained in this article represents the views and opinions of the writer only, and not the views or opinions of TipRanks or its affiliates and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy, or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment, and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices, or performance.
