Could Investing $10,000 in Altria Make You a Millionaire?

Altria (NYSE: MO) isn't a household name in the consumer staples sector, but its main brand is probably one you know. Indeed, its Marlboro cigarette brand has a nearly 42% share of the U.S. cigarette market. Add in a 7.3% yield backed by a growing dividend, and you can see why investors would be attracted to Altria's shares. Could a $10,000 investment help get you to millionaire status? Maybe, but you need to balance the reward against the risk before jumping in.

What does Altria do?

Altria is a consumer staples company because the tobacco products it makes are bought frequently by consumers regardless of the market environment. That has something to do with the nature of nicotine, of course, since tobacco, unlike food and personal care items, is not really a necessity. The main tobacco product that Altria sells is cigarettes.

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Cigarette consumers tend to be very brand loyal, so the huge market share Altria enjoys with Marlboro is a big benefit over the competition. That said, Altria only operates in North America. It spun its foreign operations off as Philip Morris International (NYSE: PM) a number of years ago. So the company's entire future rests largely on its ability to execute in just a single region.

Thus, when you step back, Altria has one major product with one major brand that operates in just one major market. That's a lot of concentration and should cause most conservative investors to pause. What if something goes wrong with the one product with the one brand in the one market? It might look something like a multiyear decline in cigarette volumes that leads to a decline in Marlboro's market share as more competition enters the broader tobacco market.

This is exactly what is happening to Altria today. The company's cigarette volume fell 10.2% in 2024 (Marlboro's decline was "just" 9%). Marlboro's market share fell from 42.2% in 2023 to 41.7% in 2024. And Philip Morris International is increasingly competing with Altria in non-cigarette tobacco products.

Altria's uphill climb

Altria isn't ignorant to the very material issues it faces. It has tried to bring in new products with more growth opportunities, including an investment in vape maker Juul and in a marijuana company. Both of those attempts to diversify beyond cigarettes flamed out, leading to billions of dollars worth of write-offs. It hasn't given up, though, recently buying vape maker NJOY.

NJOY was further along in its development than Juul and the investment has been working out better. For example, NJOY ended 2024 with a 15.3% volume increase in the fourth quarter and a 2.8-percentage-point gain in market share to 6.4%. Both of those numbers were largely driven by Altria plugging NJOY into its strong and well-established distribution network. But they show the opportunity relative to the ongoing declines in the cigarette space.

That said, NJOY is such a small contributor to the company's revenue and profits that it isn't broken out as a separate product group. And, oddly enough, NJOY is in the middle of patent litigation with Juul. It isn't going particularly well for NJOY at the moment, but Altria says the company is working on "its product solution that addresses all of the patents at issue."

MO data by YCharts

There's a reason why Altria's shares are down nearly 30% from the highs they reached in 2017. The big-picture theory is that cigarettes are a dying business. But look at the timeline of strategic moves Altria has made to deal with this issue. It spun off its foreign business and, in the process, created a new competitor. It invested in two new businesses and neither worked out. And its most recent investment, NJOY, is executing well but has found itself in a legal confrontation with Juul, which seems like something Altria should have seen coming given its previous investment in Juul.

Altria has potential, but is it worth the risk?

Altria has been around for a long time and its core cigarette business isn't going to suddenly disappear. So, in some regards, it has time to work through the difficult period it currently faces. Indeed, the nature of cigarettes has allowed the company to raise prices enough to more than offset volume declines and invest in new products. The bigger issue is that every strategic move Altria has made so far looks like it has fallen flat. The company could turn things around, but so far management's track record is not inspiring.

So could Altria and its huge dividend turn you into a millionaire with a $10,000 investment? Dividend reinvestment coupled with improved execution could possibly do that if you stick around long enough. But sticking around a company that is, frankly, executing very poorly right now will require a lot of faith. And if the hoped-for business turnaround doesn't come about, the investment could turn into a major disappointment. All in, most investors, and particularly conservative ones, will probably want to look elsewhere.

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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool recommends Philip Morris International. The Motley Fool has a disclosure policy.