One of the stocks highlighted in the Dividends Are King post was Altria Group (MO). Altria’s primary business is the manufacturing and distribution of cigarettes and tobacco products including the Marlboro, Basic, Parliament and Virginia Slims brands.

Altria was formerly a conglomerate of businesses including Kraft Foods which was recently spun off from the tobacco segment of the company to provide investors with more of a pure play on either side. It should also be noted that Altria owns a 28.6% interest in SABMiller, who manufactures Miller beer which is currently the worlds second largest brewer. Since the spinoff, Altria has continued to trade around $70/share, closing this past Friday at 67.39. Altria is attractive because of it’s 4.1% dividend and highly profitable tobacco business which is litigation prone, but the industry is better insulating and preparing itself for such setbacks.

The US tobacco industry may be seeing some setbacks from increased consumer resistance to smoking as a socially acceptable pastime. The real growth here is in Altria’s international tobacco business which is seeing tremendous growth. Current 12-month price targets are 69-89 a share. Where the share price is a year from now will be decided partly by a proposed change in the tobacco excise taxes in the United States, increasing them from 24 cents a pack to 43 cents.

The tobacco industry is not for everyone. Many people choose not to invest in it for personal reasons. While I don’t buy Altria’s products, I do see significant value in their business and it’s potential for increased profitablity and dividend growth.

[tags]shaun carter, phillip morris, mo, altria, kraft, tobacco, cigarettes, cigars, chewing tobacco, dividends, marlboro, basic, parliament, virginia slims, sabmiller, miller[/tags]