Dividend Investing During the Coronavirus (Part 2)

On Friday, we used Apple to explore what the relationship between stock prices and dividends could mean for investors. Apple’s strong balance sheet means dividends could pay well into the future, even if things take a turn. Altria’s a different story.

At its 2019 peak of $57.88, Altria’s $3.28 dividend represented a 5.67% yield. That yield rose to 9.7% when the stock price fell to $36.00.

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Unfortunately, Altria’s balance sheet isn’t nearly as strong as Apple’s. With just $2 billion in cash and an annual dividend expense of around $6 billion, Altria doesn’t have nearly enough for even a year of payments. It could cut its dividend shortly.

Altria generated more cash than shows up on this sheet, but which dividend is safer: the one backed by 15 years of cash, or the one backed by a few months’ worth?

Convicted, gutsy inventors have plenty of opportunity to seize high yields and reap the benefits.