I added more shares with the purchase of Altria Group, Inc. (MO)
49 shares @ $46.08 on 8/28/2019.
This increases my forward 12-month dividend income by $164.64 to a total of $9,307.96. I also updated my portfolio page to reflect the change.
With my most recent sock sale, I used that capital to buy more shares of Altria Group.
There has been a lot of bad news with the E-Cig industries which have been causing companies like MO, PM, BTI, and etc. to lose a lot of there share price value.
However, I think this is a short term problem. The three companies, I mentioned above, will continue to be profitable for the next 10 years.
The company has a forward PE of 8.8. The current PE is 12 where the 5-year average is 17.
2017 earnings came in at $3.39 and 2018 came in at $3.99. Analysts expect 2019 to earnings to come in at $4.19 and 2020 to come in at $4.53.
CFRA predicts earning growth of 8% for the next three years.
Currently, the dividend yield is at an all-time high of 8.37%. This blows the 5-year dividend yield average of 4.2% out of the water.
The only negative I see is that the payout ratio is a little on the high side. Based on 2018 earnings and dividend, the company had a payout ratio of 75.2%.
If we look at 2019 estimated earnings of $4.19 and a total of $3.24 of dividends for the full year. This gives us a payout ratio of 77%. Which is a little higher than 75% for 2018.
With all that said, I find MO to be undervalued, and I recommend it as a BUY at this time. I have a fair value price at $63.07. This means that MO is 53% Undervalued based on today’s price of $41.13 (9/20/2019).
What do you think about the company? Plan on owning it or already do? or why not?
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