There's No Denying Altria Group Has a High Yield, But This Stock Could Be an Even Better Buy for Dividend Investors Looking for Reliable Passive Income

Key Points Both companies have raised dividends annually for decades. Altria Group has seen demand drop for its core products. Coca-Cola's sales volume has rebounded. 10 stocks we like better than Altria Group › When investing in dividend-paying stocks, the yield (annual dividend divided by stock price) is an important consideration. But it's not the only one. Investors should understand the company's business and its results to assess the company's dividend sustainability. After all, a high dividend yield isn't helpful if the board of directors subsequently cuts the payout. Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » Altria Group 's (NYSE: MO) stock has a 6.5% yield, and it doesn't seem likely to cut the payout anytime soon. But I prefer Coca-Cola 's (NYSE: KO) shares, which yield 2.4% based on its stronger business prospects and dividend consistency. Image source: Getty Images. Looking beyond the high yield Altria Group makes and sells tobacco and nicotine products. These include cigarettes, cigars, oral tobacco, and e-vapor products. Most of the company's revenue comes from smokeable tobacco products (cigarettes and cigars). However, with lower demand, its revenue has been uninspiring for some time. Revenue, excluding excise taxes, rose 3.1% year over year in the first half of the year. That sounds promising, but a closer look reveals that it's not that impressive. That's because the increase came from price increases that offset volume declines. The smokeable products' division grew first-half sales by 3.5%, but volume fell 2.7% due to faltering demand for cigarettes. Obviously, that's not sustainable over the long run. Management targeted a mid-single-digit percentage increase in dividends from 2022 through 2028, in line with management's earnings goal. Adjusted earnings per share grew 4.9% in the first half. Still, that pace might prove hard to achieve over the long run, given the reliance on price increases to boost revenue as demand falters. Altria Group has raised dividends annually for more than 50 straight years, making the company a Dividend King . And its payout ratio of 89% doesn't indicate that streak is in immediate danger. Still, long-term investors should look elsewhere for a better dividend-growth opportunity from a steadier business. The case for Coca-Cola Coca-Cola presents such an opportunity. For those concerned about consumers turning away from soda, it has become a broad beverage company. Its drink categories include water, juice, sports drinks, and plant-based beverages that it sells in more than 200 countries. Admittedly, Coca-Cola has struggled lately with volume growth. But this had more to do with the overall shaky economy, including persistently high inflation that has left consumers weary. Notably, Coca-Cola gained market share, which leaves the company in a stronger position. Fortunately, selling volumes have increased lately. The company's second-quarter revenue grew 5% compared to a year ago. That's after removing foreign-currency translation effects and the impact of acquisitions/divestitures. Higher volumes added 4 percentage points, and price/mix contributed 2 percentage points. Coca-Cola has also been growing its profit. Second-quarter operating income gained 6% versus last year. The business produces plenty of free cash flow (FCF), providing comfort to dividend-seeking investors. For the first half of the year, Coca-Cola generated FCF (operating cash flow less capital expenditures) of $6.9 billion. That means it can easily afford the $4.6 billion that it paid in dividends. Management expects FCF of $12.4 billion for the year, which will handily cover the roughly $10 billion in dividends. Coca-Cola has an impressive dividend history, and it's also a Dividend King. Earlier this year, the board of directors raised the quarterly payout by 4% to $0.53 per share. That makes it 64 consecutive years with a dividend hike, The shares 2.4% dividend yield isn't nearly as high as Altria Group's 6.5%. However, Coca-Cola's stock does have an above-market yield, with the S&P 500 yielding 1%. Coca-Cola's fast-growing days seem likely behind it. Still, for investors looking for consistently higher dividends from a business producing steady sales and profit growth, Coca-Cola represents a better buying opportunity compared to Altria Group. Should you buy stock in Altria Group right now? Before you buy stock in Altria Group, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Altria Group wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $421,511 !* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,381,960 !* Now, it’s worth noting Stock Advisor’s total average return is 981 % — a market-crushing outperformance compared to 216% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor , and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 16, 2026. Lawrence Rothman, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .

When investing in dividend-paying stocks, the yield (annual dividend divided by stock price) is an important consideration. But it's not the only one.

Investors should understand the company's business and its results to assess the company's dividend sustainability. After all, a high dividend yield isn't helpful if the board of directors subsequently cuts the payout.

Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »

Altria Group 's (NYSE: MO) stock has a 6.5% yield, and it doesn't seem likely to cut the payout anytime soon. But I prefer Coca-Cola 's (NYSE: KO) shares, which yield 2.4% based on its stronger business prospects and dividend consistency.

Altria Group makes and sells tobacco and nicotine products. These include cigarettes, cigars, oral tobacco, and e-vapor products.

Most of the company's revenue comes from smokeable tobacco products (cigarettes and cigars). However, with lower demand, its revenue has been uninspiring for some time.

Revenue, excluding excise taxes, rose 3.1% year over year in the first half of the year. That sounds promising, but a closer look reveals that it's not that impressive. That's because the increase came from price increases that offset volume declines.