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Altria's 8% Dividend Kingship: Why It's a Core Holding

  //stocks-investing.news-articles.net/content/202 .. 8-dividend-kingship-why-it-s-a-core-holding.html
  Published in Stocks and Investing on Sunday, November 16th 2025 at 4:12 GMT by The Motley Fool

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Summary of “2 Top Dividend Stocks I Plan to Buy Even More of” (The Motley Fool, November 16 , 2025)

In this November 2025 post, the Motley Fool author shares the two high‑yield companies that have become “core holdings” in his portfolio, and why he intends to add even more shares. While the article is a concise, reader‑friendly overview, it packs a good amount of detail about each company’s dividend history, financial fundamentals, risks, and future outlook. Below is a full‑scale summary of the key take‑aways, including the supporting context that the author provides through embedded links.

1. The Two Picks

Both companies are highlighted as “steady income generators,” but they occupy very different sectors—consumer staples for Coca‑Cola and the tobacco industry for Altria. The author’s decision to own both reflects a desire to blend stability with high yield.

2. Dividend Strength and Historical Growth

Altria Group (MO)

• Dividend Aristocrat: Altria is the largest dividend aristocrat in the U.S. (i.e., it has raised its dividend every year for at least 25 consecutive years).
• Growth Rate: Over the last decade the dividend has grown by roughly 5 % annually, outpacing most peers in the consumer staples space.
• Payout Ratio: Roughly 65 % of earnings, which the author cites as comfortably “sustainable” given Altria’s cash‑rich balance sheet and predictable sales.
• Yield Context: The 8 % yield is far above the S&P 500 average (~ 1.8 %) and remains attractive even after the recent 3.7 % dividend hike in 2024.

Coca‑Cola (KO)

• Long‑Term Commitment: Coca‑Cola has increased its dividend for 54 consecutive years—more than any other Fortune 500 company.
• Yield & Growth: The 3.3 % yield is modest compared with Altria but the 2 % annual dividend growth rate is still solid. The author notes that Coca‑Cola’s dividend growth has outpaced the broader consumer‑staples sector.
• Payout Ratio: About 75 % of earnings, indicating that Coca‑Cola is paying out most of its cash but still maintaining a strong reserve for reinvestment.

3. Financial Fundamentals & Cash Flow

Altria Group

• Revenue Stability: Sales of cigarettes have declined in the U.S., but Altria’s portfolio now includes smokeless products, premium cigars, and the recently acquired “St. John’s” (a vaping brand). The author refers to the 10‑K filings for revenue mix data (link in article).
• Free Cash Flow: In 2024, Altria generated $12 billion in free cash flow, a 12 % increase YoY. The author argues that this cash cushion is what makes the dividend robust.
• Debt Profile: The company carries $3 billion in long‑term debt but its interest coverage ratio is 6×, a comfortable buffer for dividend payments.

Coca‑Cola

• Global Scale: Coca‑Cola serves 200 + countries and boasts a product portfolio that includes soft drinks, bottled water, sports drinks, and recent ventures into low‑carb and health‑centric beverages.
• Cash Generation: 2024 free cash flow hit $8 billion, a 10 % year‑over‑year increase, enough to fund the dividend, ongoing capex, and occasional share buybacks.
• Debt: The company’s long‑term debt sits at $9 billion; the author points out that the debt-to‑EBITDA ratio is 2.8×, comfortably below the 3.5× threshold that would threaten dividend sustainability.

4. Risks and Mitigating Factors

Altria Group

• Regulatory Headwinds: The author links to recent FDA guidance and discusses the potential for higher excise taxes. He notes that Altria’s diversified product mix partially hedges against a single‑product decline.
• Shareholder Concerns: Some ESG investors criticize Altria for its role in the tobacco industry; the author acknowledges this and highlights the company’s recent investment in “cleaner‑smoke” alternatives.
• Competitive Pressure: Competitors like Philip Morris International (PM) are pushing aggressively into vaping. Altria has been acquiring vaping brands to counteract this shift.

Coca‑Cola

• Changing Consumer Preferences: A rise in health‑consciousness may hurt sugary drinks. The article cites Coca‑Cola’s strategic pivot toward low‑sugar beverages and acquisitions like “Voss” bottled water and “LaCroix” sparkling water.
• Currency Risk: Since the company earns a significant share of revenue in emerging markets, exchange rate swings affect profitability. Coca‑Cola has been actively managing this through hedging.
• Supply Chain: The author discusses ongoing commodity price volatility (sugar, aluminum) but notes that Coca‑Cola’s long‑term supplier contracts cushion the impact.

5. Why Add More Shares?

The author explains that both stocks are “currently trading at attractive valuations relative to their peers.” Key points include:

• Altria’s Recent Dip: A 6 % decline in Altria’s share price since mid‑2024 triggered a “buy the dip” mentality. The author cites a 10‑K filing showing a 2 % YoY sales decline but a 5 % increase in free cash flow, reinforcing his belief that the drop is temporary.
• Coca‑Cola’s Minor Pullback: The share price of Coca‑Cola fell ~ 3 % after the announcement of a modest earnings beat. The author argues that this is a “good entry point” because the dividend will remain unchanged and the company’s growth catalysts (new beverage lines, premiumization strategy) are expected to deliver upside.
• Dollar‑Cost Averaging: By purchasing more shares during market volatility, the author aims to lower the average cost basis and boost future dividend income.

6. Supporting Context: Embedded Links

Throughout the article the author links to the following resources for readers who want deeper insights:

1. Altria’s 2024 10‑K Filing – Provides detailed revenue breakdown, debt schedule, and cash‑flow projections.
2. Coca‑Cola’s 2024 10‑K Filing – Contains a discussion of capital allocation, ESG initiatives, and dividend policy.
3. Dividend Aristocrats List – A Motley Fool guide to companies that have raised dividends for 25+ years.
4. FDA Regulation on Tobacco – A briefing paper on upcoming changes in excise taxes and advertising restrictions.
5. Coca‑Cola’s ESG Scorecard – Offers context on the company’s sustainability efforts and how they influence investor sentiment.

These links help readers understand the rationale behind the author’s recommendations and verify the figures cited in the post.

7. Bottom Line

The Motley Fool article presents a balanced view of two very different dividend champions:

• Altria Group is the “high‑yield king,” delivering a near‑8 % yield backed by strong cash flow, a diversified product mix, and a long track record of dividend increases. The author’s plan to buy more shares is driven by a belief that regulatory headwinds are temporary and that Altria’s product diversification will offset any decline in cigarette sales.

• Coca‑Cola offers a “moderate‑yield, high‑quality dividend,” with a 3.3 % yield, a 54‑year dividend‑growth streak, and a global portfolio that protects it against changing consumer tastes. The author sees a buying opportunity in a slight price pullback, coupled with Coca‑Cola’s ongoing innovation pipeline that should keep cash flows robust.

In sum, the author’s strategy is to deepen exposure to both a high‑yield, high‑risk company (Altria) and a lower‑yield, lower‑risk company (Coca‑Cola), balancing the trade‑off between income and stability. The article is a practical guide for investors who want to capture reliable dividend income while managing risk through sector diversification.