Is Altria Stock a Long-Term Buy?

Key Points

• Dividend investors cherish Altria stock's decades-long track record of dividend growth.

• But its slow start in next-generation products is a problem.

• Investors can trust Altria's stable floor, but its unknown upside could be an issue for some.

• 10 stocks we like better than Altria Group ›

Altria Group (NYSE: MO) is a world-class dividend stock with more than five decades of uninterrupted dividend increases. The legendary company, most known for its Marlboro cigarette brand, has become a staple in many dividend stock portfolios, but, admittedly, the long-term outlook is arguably as uncertain now as it has ever been.

The tobacco stock and broader nicotine industry are transitioning from combustible cigarettes to newer, smoke-free products.

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Altria's success in capturing these emerging trends will say much about the company's worthiness for your portfolio as its tobacco business eventually runs out of runway. Is Altria doing the right things to make it a long-term buy today?

Here is what you need to know.

Image source: Getty Images.

Altria doesn't look like the next-generation industry leader

The United States is the world's second-most-lucrative tobacco market, and Altria has enjoyed decades of dominance in that market via Marlboro, which still holds a 41% share of the retail cigarette market in the U.S. and 59.5% of the premium cigarette market segment.

However, as you may already know, smoking rates have plunged over time as fewer people pick up smoking and more smokers shift to an alternative nicotine habit. Today, there are three primary smoke-free products: electronic vapes, heated tobacco devices, and oral nicotine salt pouches.

But Altria has struggled to field these next-generation products.

It has had a tumultuous go at electronic vaping, beginning with a failed $12.8 billion stake in Juul, separating from the company, and then acquiring Njoy in 2023. Ironically, Altria recently lost a patent battle against Juul when it tried to introduce a competitive device. Altria went the partnership route in the heated tobacco space, forming a majority-owned joint venture with JT Group to develop Ploom for regulatory submission.

As a result, Altria essentially remains on the starting block with these two product categories while competing brands establish themselves in the market.

Oral nicotine salt pouches have been Altria's biggest success in the smoke-free space. It acquired Helix Innovations and launched On! to compete with Philip Morris International's Zyn and British American Tobacco's Velo brands. But still, On! is playing catch-up to Zyn, and the explosive popularity of these products has invited additional competition into the space.

But the company is on solid ground, and that shouldn't change for a long time

In the second quarter of 2025, Altria derived approximately 83% of its operating income from smokeable products, and even that remaining 17% represents all oral tobacco and nicotine products, not just On!. In other words, smoke-free products aren't nearly ready to carry Altria and probably won't be for some time.

Fortunately, the legacy smokeable products segment is such a cash cow that Altria continues to, albeit slowly, increase its free cash flow per share as it raises prices to offset volume declines and repurchases stock. The company also has a solid balance sheet with an additional multibillion-dollar stake in Anheuser-Busch InBev (roughly $9.3 billion), which it can liquidate if it needs cash.

Altria's most recent dividend hike, a 3.9% increase, is a solid bump when the stock offers a starting yield of 6.5%. Also, analysts estimate that Altria's current playbook will allow it to grow earnings by an average of 3.4% annually for the next three to five years.

At that rate, barring a sudden acceleration in the decline of the smokeable products business, Altria can continue to grow steadily and raise its dividend for probably another five years at least. By then, it may have made significant strides with its next-generation products.

Altria has a vast distribution network thanks to Marlboro, so I would hesitate to write off Altria simply because it's currently behind in these new product categories. It could make up ground with a fury if it executes well over the coming years.

Is Altria stock a long-term buy?

Whether Altria is a good long-term stock to buy for you depends on what you value. Altria is currently an excellent high-yield dividend stock. It will likely remain so for years to come, even if it isn't the market leader in smoke-free products that it was with its legacy cigarette business.

So, if you value a steady dividend that generates impressive income from day one, Altria is a fine long-term buy. If you're seeking higher growth and potential capital gains, Altria may not be the right choice for you.

To deliver on that front, Altria will need to do a much better job than it has to this point in rolling out new products and establishing itself in this transitioning nicotine industry. Again, I wouldn't write Altria off, but the company must also prove that it can deliver. Until then, it's probably better to err on the side of caution and look elsewhere.

Should you invest $1,000 in Altria Group right now?

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Justin Pope has no position in any of the stocks mentioned. The Motley Fool recommends British American Tobacco P.l.c. and Philip Morris International and recommends the following options: long January 2026 $40 calls on British American Tobacco and short January 2026 $40 puts on British American Tobacco. The Motley Fool has a disclosure policy.