Let us start with a surprising fact: a company with negative revenue growth has outperformed the S&P 500 over the last five years, delivered mid-double-digit annual returns excluding dividends, offered a compelling 6.7% dividend yield, and acted as a market crash hedge—all with lower volatility than your typical tech stock. Introducing the paradox—Altria Group (NYSE: MO).
The maker of Marlboro might not grab headlines, but it arguably deserves a central place in your portfolio. We emphasize ‘portfolio’ because relying on one or a few stocks is inherently risky, no matter how strong the fundamentals look. At Trefis, we prioritize risk management in our High-Quality portfolio, which has outperformed the S&P 500 and delivered over 91% returns since inception.
Let’s Talk Numbers & You’ll Be Surprised
- 15.6% Annualized Return Over 5 Years – add the 6.7% dividend and you’re looking at total returns that beat the S&P 500 handily. This isn’t a one-off win—it’s structural, repeatable, and hiding in plain sight.
- Cash Flow Machine on Discount – Altria generates $8.6 billion in free cash flow on just $20.4 billion in revenue, delivering a massive 42% free cash flow margin. That’s Silicon Valley-style efficiency without the lofty valuations. Its operating margin? Over 55%. This business churns out cash like a pro.
- With a debt-to-equity ratio of just 25%, there’s no debt bomb waiting to explode.
The kicker? All of this is available at a P/E ratio below 10. You’re paying a bargain price for a business already delivering an 8% free cash flow yield and an 11% earnings yield.
But Wait – Isn’t the Business Dying?
Here’s the truth: Altria’s revenue hasn’t grown. Its 3-year average revenue growth stands slightly negative at -1.1%. And it’s not a concern.
Why? Because this isn’t about revenue expansion—it’s about capital efficiency, strong cash returns, and defensive resilience. MO doesn’t need to grow to generate wealth. It simply needs to run—and it does that better than most.
An All-Weather Stock in a Rainstorm Market
Think MO only works in bull markets? Think again. In 2022, while the S&P 500 dropped nearly 20%, MO returned +4.4%. And in 2025 (so far), with the broader market down 8%, MO is up +11.2%. It’s your portfolio’s built-in umbrella.What’s more? Since December 2020, MO’s annualized volatility is just 20.5%, only slightly above the S&P 500’s 18%. For a stock delivering superior returns and high yields, that’s impressively stable.
So how does a tobacco company continue to thrive in 2025? Through pricing power, consumer stickiness, and a dedicated customer base. Pair that with years of operational rigor and a focused product lineup, and you get a business that behaves more like a utility than a consumer product.
Should you only look for stocks like this? Of course not. The market is broad. The real advantage lies in diversifying smartly—combining different categories to boost upside while reducing risk and volatility. That’s the philosophy behind the Trefis High Quality Portfolio, which features 30 hand-picked stocks and has consistently outpaced the S&P 500 over the past four years. Why? As a group, these stocks have delivered higher returns with lower risk—less of a roller-coaster ride, as highlighted in the HQ Portfolio performance metrics.
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