Stifel Trims Altria Price Target Amid Cost Pressures, Maintains Buy on Dividend Strength
Altria Group, Inc. (NYSE:MO), a mainstay for income-focused investors, faces renewed scrutiny as Stifel Nicolaus adjusted its financial outlook for the tobacco giant. The investment firm trimmed its price target to $68 from $72 on January 30, though it maintained a Buy rating on the stock.
The revision follows Altria's fourth-quarter earnings report, which showed earnings per share of $1.30, matching analyst expectations but unchanged from the prior year. A closer look revealed pressures beneath the surface: operating costs exceeded forecasts in both its core Smokable Products and Oral Tobacco segments, squeezing profitability.
"The cost environment remains challenging," noted a Stifel analyst in the research note. "While the initial 2026 earnings guidance is in line with consensus, the path to get there—with a heavier weighting toward the second half—requires execution in a tough market."
Altria's management, during the earnings call, laid out its long-term vision through 2028. The company is targeting mid-single-digit annual growth in adjusted diluted EPS, building from a 2022 base of $4.871. From 2022 through 2025, the company reported diluted EPS growth of 8.9%, though the adjusted figure—which excludes one-time items—grew at a more modest 3.6% pace.
For shareholders, the dividend narrative remains central. Altria plans to continue raising its payout at a mid-single-digit annual rate through 2028. The company highlighted a 3.9% dividend increase in 2025, the 60th hike in 56 years—a track record few S&P 500 companies can match. Future increases, however, remain at the board's discretion, subject to earnings performance and cash flow.
Investor Perspectives:
"This is a classic 'hold your nose and collect the dividend' situation," said Michael R., a portfolio manager at a value-oriented fund. "The yield is compelling, and the guidance suggests management is committed to returning cash. The cost issue is a near-term operational hiccup in a long-term income story."
"A $4 cut isn't trivial—it signals real pressure," argued Sarah Chen, an independent ESG analyst. "This isn't just about costs; it's about a business model in secular decline. They're guiding for mid-single-digit growth while grappling with shrinking volume and regulatory risks. The dividend might be safe for now, but is that enough?"
"I've held MO for decades for the income," shared David P., a retired investor. "The target cut is disappointing, but the dividend keeps coming. In this market, a reliable 8%-plus yield from a company that's raised it for over half a century is rare. I'm not selling."
Altria's position highlights the tension facing traditional sin stocks: robust cash generation and shareholder returns versus structural industry challenges and evolving consumer habits.
Disclosure: This is an independent financial news analysis. The author holds no position in MO at the time of publication.