Tobacco giant Altria Group (NYSE:MO) entered into an accelerated share repurchase (ASR) transaction with Morgan Stanley (NYSE:MS) and Goldman Sachs (NYSE:GS) on March 15, 2024, aimed at repurchasing $2.4 billion worth of its own stock. The company has already secured 85% of the targeted shares for repurchase and expects to acquire the remaining shares by the end of the second quarter.
The move follows Altria’s partial sale of its investments in the beer company Anheuser-Busch InBev (NYSE:BUD) through a secondary offering of 35 million shares. The company said it will use the proceeds from the transaction for share buybacks.
Altria emphasized that the sale of stakes and buybacks will be accretive to its 2024 earnings. Thus, it raised the full-year adjusted EPS guidance to $5.05 to $5.17, representing a growth rate of 2% to 4.5% from $4.95 in 2023. Earlier, the company expected its EPS to be in the range of $5.00 to $5.15.
Altria Returns Significant Cash to Shareholders
Altria has a long history of returning cash to its shareholders through share repurchases and higher dividend payments. Notably, in 2023, it repurchased 22.7 million shares at an average price of $43.96, totaling $1 billion. Further, it paid dividends worth $6.8 billion.
It’s worth highlighting that Altria has increased its dividends 58 times in the past 54 years, making it a Dividend King—a company that has increased dividends for 50 consecutive years.
What is the Outlook for Altria Stock?
Altria stock has risen about 6% in one year. The company expects its EPS to grow at a mid-single-digit rate annually through 2028. This growth will enable the company to increase its dividend at a pace similar to its EPS growth.
MO stock has three Buy, three Hold, and two Sell recommendations for a Hold consensus rating. Analysts’ average price target on MO stock is $37.64, which implies 15.66% downside potential from current levels.
