Your passive income grows while you do absolutely nothing when you own shares in a firm that (at least occasionally) raises its dividend.
In that sense, let’s examine two venerable corporations, Altria Group (MO 0.20%) and General Motors (GM 0.56%), that just announced dividend increases and see just how much more they are rewarding their shareholders.
1. Altria Group
Income investors who don’t mind that Altria’s primary product is cigarettes have traditionally favored the company. This is due to the fact that Altria has consistently spit out a high-yield dividend every quarter that is maintained by routine (usually once-per-year) hikes. This will increase by 4% to $0.94 per share in 2022.
Altria’s classic cigarette goods have low production costs, but because they are addictive, the corporation can charge high rates for them. Juul, the company’s controversial e-cigarette brand, is a different matter; if a recent delay placed on the Food and Drug Administration’s (FDA) prohibition does not result in an outright reversal, it may even be completely removed from the product range. Concerning is also the cigarette market’s ongoing downturn.
The company had a dismal decline in net income of almost 60% and a roughly 6% year-over-year decline in net revenue in its most recent reported quarter. Altria anticipates a 4% to 7% increase in annual per-share profitability over 2021, thus the remainder of the year should be better. It did not offer any revenue estimate, but experts as a whole anticipate a little decline in revenue of 1% annually.
For those who feel comfortable investing in sin stocks, Altria has historically been a good dividend stock. Its future viability in an industry that is now a shell of what it once was is the question. We’ll see if it can continue to do so; thus far, it has managed to withstand the storm without suffering significant erosion in its principles.
Altria’s forthcoming dividend, based on the most recent closing share price, would yield a sizable 8.4%. Investors with records as of September 15 will get the first payout of the increased amount on October 11.
2. General Motors
General Motors is to automobiles what Altria is to cigarettes. With their electric vehicles (EVs), newcomers like Tesla and Rivian may generate headlines, but the long-standing incumbent carmaker is still hanging in there and fighting hard.
One way it does this is by restoring its payout, which is the ultimate dividend boost. General Motors is transitioning to a quarterly dividend of $0.09 per share from exactly $0.00 in the prior quarter — the business last made a distribution in March 2020. Additionally, it plans to revise its share repurchase program, increasing the authorization from $3.3 billion to $5 billion, in order to give its stock a little more jump.
In announcing the reintroduction of the dividend and the rise in the buyback, General Motors said the bold development of its EV offerings and advances in modular battery production has created room for such investor-pleasing initiatives. “Progress on these important strategic goals has enhanced our confidence in our ability to fund growth while also returning cash to shareholders,” CEO Mary Barra said.
The reinstituted dividend from General Motors, which yields 0.9% at the present stock price, will be paid on September 15 to shareholders of record as of Aug. 31.