2 Dividend Stocks Yielding More Than 10%: Are They Right for Your Passive Income Portfolio?

Investors seeking passive income often gravitate towards dividend stocks, and two companies currently offering yields above 10% are Altria Group (MO) and Philip Morris International (PM). However, it's crucial to evaluate their financial health, business models, and dividend growth histories before making an investment decision. This article explores these aspects to help you determine if these high-yielding stocks are right for your passive income portfolio.

Altria Group, Inc. (MO) and Philip Morris International Inc. (PM) both offer attractive yields, with Altria at 10.06% and Philip Morris at 10.12%. However, their financial health and stability differ. Altria has a strong balance sheet, generating substantial free cash flow ($4.3 billion in 2023) and maintaining a low debt-to-equity ratio of 0.2. Its dividend payout ratio is around 70%, indicating a sustainable dividend. Philip Morris also generates significant free cash flow ($8.1 billion in 2023) but has a higher debt-to-equity ratio of 0.5. Its dividend payout ratio is around 80%, suggesting a less sustainable dividend.

Both companies have demonstrated consistent dividend growth, with Altria increasing its payout for 53 consecutive years and Philip Morris for 11 years. Their competitive advantages, along with strong cash flows, support their high dividend yields. However, investors should be aware of regulatory risks and the long-term decline in smoking rates.



Altria's business model relies on its dominant market share in the U.S. cigarette industry, while Philip Morris has a strong global presence and is investing in reduced-risk products. Their dividend growth histories and future prospects influence their attractiveness as passive income investments. Altria's exposure to the U.S. tobacco market and Philip Morris' international focus may lead to different risk profiles, so investors should consider their risk tolerance and investment horizon when evaluating these dividend stocks.

In conclusion, Altria Group and Philip Morris International offer attractive yields, but their financial health, business models, and dividend growth histories differ. Altria's stronger financial health and more sustainable dividend make it a more attractive choice for a passive income portfolio. However, both companies have demonstrated consistent dividend growth and offer high yields, making them worth considering for income-focused investors. As always, thorough research and monitoring of the companies' financial health are essential to ensure that their dividends remain stable and growing.