1 Magnificent S&P 500 Dividend Stock Down 14% to Buy and Hold Forever

• Altria’s halfway marketplace is shrinking, but its concern is evolving.

• The institution is expanding its smoke-free portfolio and aggressively trimming its expenses.

• Altria's debased valuation and precocious output marque it a bully antiaircraft play successful a messy market.

• 10 stocks we similar amended than Altria Group ›

The S&P 500 has risen astir 16% this twelvemonth and is hovering adjacent its all-time high. It looks historically costly astatine 31 times earnings, and plentifulness of near-term headwinds -- including sticky inflation, elevated Treasury yields, geopolitical conflicts, and the Trump administration's unpredictable argumentation shifts -- could compress those valuations.

However, investors should retrieve that astir of the S&P 500's rally was driven by high-growth tech giants similar Nvidia, Apple, Microsoft, Amazon, Alphabet, Meta, and Tesla. Those "Magnificent Seven" companies inactive relationship for much than a 3rd of the index's full marketplace headdress and often overshadow its smaller and little fashionable stocks.

But if we look beyond the Magnificent Seven stocks, we'll spot plentifulness of undervalued stocks successful the S&P 500 that are trading good beneath their all-time highs. Some of them besides wage precocious dividends -- and they could pull much income investors arsenic involvement rates decline. One of those stocks is Altria (NYSE: MO), the largest baccy institution successful America. It's presently trading 14% beneath its all-time high, but I judge it's inactive a large dividend banal to bargain and clasp forever.

Altria, which was erstwhile known arsenic Philip Morris, dominates the home cigaret marketplace with its flagship Marlboro cigarettes. In 2008, Altria spun disconnected its overseas concern arsenic Philip Morris International. At the time, Altria planned to right-size its shrinking home concern arsenic PMI expanded crossed higher-growth overseas markets.

Altria mightiness initially look similar a wobbly concern arsenic big smoking rates successful the U.S. descend to multi-decade lows. From 2019 to 2024, its yearly shipments of smokeable products (cigarettes and cigars) dropped from 103.45 cardinal sticks to 70.34 cardinal sticks, its retail cigaret marketplace stock shrank from 49.7% to 45.9%, and Marlboro's stock dipped from 43.1% to 41.7%. But during those 5 years, Altria's gross (net of excise taxes) inactive grew astatine a CAGR of 0.7% arsenic its adjusted EPS accrued astatine a CAGR of 3.9%.

The institution achieved that unchangeable maturation by raising prices, cutting costs, and buying backmost much shares to boost its net per stock (EPS). It besides divested immoderate of its non-core assets (including its winemaking division) and expanded its portfolio of smoke-free products -- which includes e-cigarettes and nicotine pouches.