Brett Schafer, The Motley Fool

Sun, Jun 22, 2025, 7:00 AM5 min read

• Altria's cigarette volume declines are accelerating, but it's maintaining earnings growth through price increases.

• The company is trying to grow with new nicotine products, but it has struggled against the competition.

• The stock has a high dividend yield, but the business looks to be at risk over the next 10 years.

• 10 stocks we like better than Altria Group ›

In times of turmoil and uncertainty, investors often flock to consumer staples. That has occurred yet again in 2025. Altria Group (NYSE: MO) has posted a total return of 17% year to date, compared to a measly 2% return for the S&P 500 index. With domestic rights to the tobacco brand Marlboro, among other assets, the company has long been a reliable dividend stock, and it boasts a sky-high dividend yield of 6.8% as of this writing.

Should you buy shares of Altria Group to ride out market volatility? Here are the positives and negatives of owning the tobacco stock right now.

The largest selling point against Altria Group and its cigarette business is the rapidly declining usage of cigarettes in the United States. While good for society, it is a headwind to Altria's bottom line, with gradually declining demand for the company's core product. And this trend may be accelerating as Marlboro volumes fell 13% year over year last quarter, one of the worst volume performances in the company's history.

Altria has been able to counteract volume declines with price increases. Smokeable net revenue after excise taxes only dipped 4.1% last quarter with operating income up 1.2% to $2.47 billion. Altria has long been able to prop up its bottom line despite the shrinking pool of smokers in the United States. It reported $11.62 billion of consolidated operating income over the past 12 months, a figure that has held relatively steady over the last five years.

Just because cigarette usage in the U.S. is declining, however, does not mean nicotine usage is down. New forms of nicotine consumption have popped up in recent years, such as electronic vapor and tobacco-free nicotine pouches. Altria has made numerous investments into these product categories.

It now owns the NJOY vaping brand, which is growing market share in the U.S. (6.6% as of last quarter). Revenue and earnings from NJOY are not disclosed today, but it is a growing brand for Altria that can help make up for lost cigarette customers. Altria also owns the On! pouch brand, which grew shipment volumes 18% last quarter to 39.3 million.