In Our 2024 Investment Strategy for Equities, we introduced our DIVOS™ strategy and during this week’s market turmoil, we initiated a very small position in MO (Altria Group) and intend to hold and accumulate this stock for the foreseeable future.
Here’s how we think it fits our DIVOS model.
Demographics
Altria Group develops, manufactures, and sells tobacco products and while smoking has been in the decline in the United States, smoking continues to take place all around the world. We noted the smoking ubiquity on a recent European and Asian vacation so we are confident that for at least the next 10 years, smoking will continue around the world.
Income
MO is a dividend king which means it has been paying dividends for 50 years and our goal is for at least another 10 years of dividends from this equity. Additionally, MO has generated a whopping $1.08M net income per employee in 2023 and has a 5 year average net income per employee of $500k.
Value
As of the time of this post, MO is trading at about 2 percent over it’s 52 week low. We will slowly accumulate shares from here but we are keeping an eye on the market volatility and for bond rates to stabilize before we make any significant purchases in this stock.
Options
MO has an options market and we look forward to selling cash secured PUTS and sell covered calls on this stock to squeeze more value and profits out of this equity. As of 4th of Oct 2023 the call option table below shows a potential yield of about 5% for a buy-write trade executed for January 2024 out-of-money trade today theoretically.
S&P 500
MO is a member of the S&P 500 and currently fits our bias toward three industries moving forward: Healthcare, Technology & Consumer Discretionary. If you want to know why we favor these three industries, check out the S&P 500 Sector Performance chart.
We’ll let you know as we accumulate more, we’ve already set our MO to DRIP (Dividend Re-investment Plan) so we’ll be acquiring shares automatically once we receive dividends but we’ll also buy more via cash secured puts and buy-write trades so stay tuned, stay profitable and stay solvent…