Stifel raises Altria stock price target to $72 on dividend growth

Altria (MO) reported strong Q2 2025 results, significantly surpassing analyst expectations with adjusted diluted EPS of $1.44 and revenue of $6.1 billion. This performance, coupled with the board's approval of a 3.9% quarterly dividend increase to $1.06—marking its 60th increase and extending its 55-year dividend payment streak—has led Stifel and BofA Securities to raise their price targets and reiterate Buy ratings. Analysts highlight Altria's operational resilience, consistent free cash flow generation, and attractive 6% dividend yield as key drivers for potential stock upside.

Analysis

Altria Group (MO) has demonstrated significant operational strength, reporting second-quarter 2025 results that comfortably surpassed analyst consensus. The company posted an adjusted diluted earnings per share of $1.44, exceeding the forecast of $1.38, and revenue of $6.1 billion, which was substantially higher than the anticipated $5.2 billion. This financial outperformance has been endorsed by the analyst community, with Stifel raising its price target to $72.00 from $65.00 and BofA Securities increasing its target to $64.00, both maintaining Buy ratings. A central pillar of the investment case is Altria's robust capital return program, underscored by a 3.9% increase in its quarterly dividend to $1.06 per share. This marks the 60th dividend increase in the company's history and extends its streak of uninterrupted dividend payments to 55 years. The forward-looking annual payout of $4.24 per share represents a 78% payout ratio based on fiscal 2025 estimated EPS, supported by a compelling 6% dividend yield and a P/E multiple of 13x. Stifel anticipates continued mid-single-digit dividend growth, fueled by strong free cash flow generation, which has historically allowed dividend growth to outpace EPS growth since 2008.

Key Decisions for Investors

• Income-focused investors should view the 3.9% dividend hike and high 6% yield as a strong confirmation of Altria's commitment to shareholder returns, which appears sustainable given the strong free cash flow generation.
• Given the dual analyst price target upgrades and an earnings beat, investors may find the current 13x P/E ratio an attractive entry point for potential capital appreciation, especially as Wall Street signals renewed confidence in the company's financial trajectory.
• It is prudent to monitor the external pressures of economic challenges and illicit trade, as the company's ability to maintain its noted 'operational resilience' is critical to achieving the consistent EPS growth required to support future dividend increases and share price performance.