Altria vs. Eli Lilly: What's the Better Stock for Dividend Investors?

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David Jagielski, The Motley Fool

Wed, Apr 2, 2025, 2:06 AM 4 min read

Tobacco elephantine Altria (NYSE: MO) provides a tremendously precocious dividend output of 7%, which is good supra the S&P 500 index mean of 1.3%. But it comes with risks, arsenic its concern has been struggling to turn successful caller years, and its complaint of dividend increases has been modest.

Meanwhile, pharma institution Eli Lilly (NYSE: LLY) offers a overmuch little output of little than 1%, but its dividend maturation complaint has been acold much impressive.

Which banal is the amended bargain if your precedence is to cod a batch of dividend income?

Altria has an awesome streak of raising its dividend for 55 consecutive years. Eli Lilly's existent streak lone goes backmost to 2015. But portion Altria has a much awesome way record, that doesn't needfully marque it a amended dividend maturation stock.

Prior to the Great Recession successful 2008-09, Eli Lilly's dividend maturation streak spanned much than 40 consecutive years. And portion it would intermission its complaint increases for aggregate years, since it has resumed raising its dividend, its increases person been overmuch higher than Altria's.

In the past 5 years, Altria's dividend has risen by conscionable implicit 21%, portion Eli Lilly shareholders person seen their payouts double.

A large crushed Eli Lilly's dividend output whitethorn not look each that breathtaking is that the banal has been performing truthful well. In 5 years, the healthcare banal has climbed 476% successful worth portion Altria has risen by astir 52% (which lags the S&P 500's returns of much than 116%). A soaring banal volition spot its output autumn since it becomes much costly to cod its dividend, adjacent amid generous increases.

And a large portion of the crushed wherefore Eli Lilly's banal has been specified a blistery bargain is owed to the tremendous maturation it is achieving, and the maturation opportunities it possesses successful the GLP-1 value nonaccomplishment market. Altria, meanwhile, faces an uncertain aboriginal up arsenic baccy usage declines and it looks for a mode to turn its business.

MO Operating Revenue (Quarterly YoY Growth) Chart

If you're investing successful a banal to cod a dividend from for conscionable the adjacent 12 months, past you mightiness beryllium tempted to spell with Altria. But if you're a semipermanent investor, past by going with the baccy banal you hazard the accidental that the institution whitethorn chopped its dividend successful the aboriginal if its profits diminution owed to slowing demand.

Eli Lilly's banal exploded successful the past 5 years, but with a much elevated valuation, it mightiness not make those types of returns successful the future. Should its returns mean and the institution proceed to marque generous complaint hikes, its output could commencement to rise, which is wherefore investors shouldn't absorption excessively overmuch connected conscionable the existent payout.