Key Takeaways
- Altria Group (MO) raised its quarterly dividend 4.7% in August, and Philip Morris International (PM) raised its own 8.8% in September.
- At today’s yields, $10,000 in Altria pays $590 a year, against $320 in Philip Morris.
- Over the twelve months to Sept. 30, 2026, Altria’s dividends took 78% of its free cash flow, against 68% at Philip Morris.
- Philip Morris is growing faster, with smoke-free products over 40% of its Q3 revenue, while Altria trades at a much lower forward P/E.
Altria Group raised its quarterly dividend 4.7% to $1.11 a share in August, its 61st increase in 57 years. A month later, Philip Morris International went bigger, raising its own dividend 8.8% to $1.60 a share for its 19th straight year of raises.
That leaves income investors with two very different tobacco checks: a 5.9% yield at Altria, or 3.2% at Philip Morris with a faster-growing business behind it. If I could only own one for the next decade, which one gets the money?
| Metric | Altria Group (MO) | Philip Morris International (PM) |
|---|---|---|
| Dividend yield | 5.9% | 3.2% |
| Annual dividend | $4.44 | $6.40 |
| Dividend growth, fiscal 2020-2025 | 4.1% a year | 3.5% a year |
| Record (company’s count) | 61 raises in 57 years | 19 straight years of raises |
| Cash dividend payout ratio (TTM to Sept. 30, 2026) | 78% | 68% |
| Net debt/EBITDA (LTM) | 1.7x | 2.0x |
| Forward P/E (NTM) | 13x | 22x |
Source: TIKR, Nov. 9, 2026; records from each company.
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Altria’s big check is tight but steady
Altria’s Q3, reported Oct. 29, was slow and steady. Net revenues rose 1.0% to $6.1 billion from Q3 2025, and adjusted EPS rose 4.8% to $1.52.
Domestic cigarette volumes keep falling, but Marlboro is gaining premium share with Cowboy Cut, a Marlboro priced for value-sensitive smokers, and on! Nicotine pouch shipments rose 13.3%.
Management raised its 2026 adjusted EPS guidance to $5.66-$5.74, from $5.56-$5.72; the stock jumped 7% in premarket trading, and the Board added $1 billion to its buyback program in October.
Free cash flow has covered Altria’s dividend every year since fiscal 2018, after falling short in fiscal 2016 and 2017:
From fiscal 2021 to fiscal 2025, its cash dividend payout ratio held between 75% and 82%, and it was 78% over the twelve months to Sept. 30, 2026: tight, but very consistent.
Altria targets mid-single-digit dividend raises each year through 2028, and its 2026 guidance has adjusted EPS growing 4.5% to 6.0%, so earnings are keeping up with that goal.
The main risk is the core business: cigarette, Copenhagen and Skoal volumes keep shrinking, and its NJOY ACE vape won’t be back on the market in 2026.
Philip Morris is the faster grower
Philip Morris offers the opposite deal: a smaller yield, but a business still growing its volumes.
Its Q3 net revenues, reported Oct. 21, rose 5.5% to $11.4 billion and adjusted EPS rose 5.4% to $2.36, with smoke-free products like IQOS, ZYN and VEEV over 40% of revenue.
But it trimmed its 2026 adjusted EPS guidance to $8.29-$8.44 on a smaller currency boost, and expects its US business to roughly break even in Q4 as it spends heavily behind ZYN, so the stock closed down 1% that day.
“The success of PMI is built on investing in the short term for long-term growth, just as we have with IQOS and, in decades past, Marlboro,” CFO Emmanuel Babeau said on the Q2 call.
Its free cash flow has covered the dividend in every fiscal year since 2016 except fiscal 2023.
Dividends took 101% of free cash flow in fiscal 2023, 81% in fiscal 2025, and a comfortable 68% over the twelve months to Sept. 30, 2026.
That’s more room than Altria has today, on a bumpier record.
Management expects a record of around $13.5 billion of operating cash flow in 2026, though it sees energy costs and the conflicts in the Middle East and Ukraine weighing a bit more in Q4.
So which dividend wins?
If I can only hold one for the next 10 years, it’s Altria.
At each stock’s 5-year dividend growth rate, $10,000 in Altria pays $590 this year and about $848 in year 10, an 8.5% yield on the original $10,000, for about $7,122 over the decade.
The same $10,000 in Philip Morris pays about $3,761, and at those rates its income never catches up.
Altria needs its earnings to keep growing to hold that pace on a 78% payout ratio, and analysts expect them to:
That’s $5.42 a share in fiscal 2025, rising to $6.16 by fiscal 2028, enough to fund mid-single-digit raises without stretching the payout.
And at 13x forward earnings, against 22x for Philip Morris, I’m not paying up for it.
Philip Morris has the better growth story. Its sales are rising faster, smoke-free products are a growing share of them, its latest raise beat Altria’s, and its payout ratio has more room today.
It’s just that over a decade, I’d rather take the much bigger check from a dividend that’s been covered the same way, year after year.
Of course, Altria’s dividend goal only runs through 2028, so I’ll be watching what it promises after that.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
