For many investors, particularly those heavily invested in artificial intelligence (AI)-related stocks, these high-growth assets have delivered substantial returns over the past few years. However, if you are an older or more conservative investor, now might be an opportune time to optimize your investment portfolio to navigate different market cycles. High-growth AI stocks perform strongly in bull markets but may face sharp corrections during bear markets, as evidenced by the risks revealed during the 2022 market downturn. If you find it difficult to withstand drawdowns of 50% or more, shifting towards more stable dividend-paying stocks might be a wiser choice. As an ultra-high dividend yield stock, Altria Group (MO) has demonstrated steady performance year-to-date in 2025, with a dividend yield exceeding 6%. It is worth considering whether it possesses the potential to withstand market volatility.
Altria Group owns brands such as Marlboro cigarettes, oral tobacco, cigars, and e-vapor products, and holds a significant investment in Anheuser-Busch InBev. Although long-term cigarette consumption in the United States has been declining, the company continues to optimize profits through price increases, cost control, and business financialization. Over the past decade, its consolidated free cash flow has grown by 59%, reaching $8.7 billion in the last twelve months, reflecting strong cash flow generation capabilities. In response to market changes, Altria is gradually expanding its non-cigarette business: the cigar segment remains stable, while e-vapor products and oral nicotine pouches are experiencing growth. For instance, the On! brand saw a 26.5% volume increase last quarter. Furthermore, the company’s partnership with South Korea’s KT&G aims to explore new nicotine categories and the energy sector. While the outcomes remain to be seen, this move clearly demonstrates its commitment to adapting its business focus for the future.
Backed by the stable cash flow from its cigarette business and its price increase strategy, Altria’s dividend performance is outstanding. The current dividend yield is 6.27%, and the dividend per share has grown steadily by 87.6% over the past decade, reflecting the company’s commitment to shareholder returns. From a financial perspective, the company’s free cash flow per share is $5.15, while the annual dividend per share is $4.24. This indicates that the free cash flow amply covers the dividend obligations and leaves room for future dividend growth. Simultaneously, the share repurchase program has reduced the number of outstanding shares, further supporting the increase in dividend per share. Altria is well-positioned to continue its historical dividend growth trajectory over the next decade, providing investors with a reliable income source.
Compared to popular high-growth companies like those in the AI sector, which may experience significant volatility during market crashes or economic recessions, Altria’s tobacco industry demonstrates stability across economic cycles. History shows that during economic downturns, tobacco and nicotine consumption tend to remain stable or even increase slightly. This makes Altria stock an ideal choice for balancing a high-risk AI-focused portfolio. By holding such stable dividend-paying stocks, investors can not only receive an annual cash return of over 6% but may also benefit from its relatively resilient performance during market declines. This provides a buffer for the overall investment portfolio and creates reinvestment opportunities when the market is at a low point.
In summary, if you are concerned about the risks of over-concentration in AI growth stocks, Altria Group, as an ultra-high dividend yield stock, deserves consideration for building a more balanced and risk-resistant investment portfolio, thanks to its resilient cash flow, track record of dividend growth, and industry defensive characteristics.
