Key Takeaways
- ExxonMobil raised its quarterly dividend 4% to $1.07 a share on Oct. 30, a day after Altria beat estimates and raised its 2026 earnings guidance.
- Altria yields 5.8%, more than twice ExxonMobil’s 2.4%, and it grew its dividend faster from fiscal 2020 to fiscal 2025.
- ExxonMobil’s dividend is better covered, using 40% of its free cash flow over the 12 months to Sept. 30 against 78% for Altria, and it carries far less debt.
- Altria’s revenue has barely moved in a decade, so a 10-year hold rests on its pricing and margins outrunning shrinking cigarette volumes.
Two of the market’s best-known dividend payers reported within a day of each other last week.
On Oct. 29, Altria (MO) beat estimates and raised its 2026 adjusted earnings guidance to $5.66-$5.74 a share. A day later, ExxonMobil (XOM) raised its quarterly dividend 4% to $1.07 a share, from $1.03.
So the choice is a 5.8% yield on one side, and a 2.4% yield backed by a much stronger balance sheet on the other. If I could only hold one of them for the next 10 years, which would it be?
MetricExxonMobil (XOM)Altria (MO)Dividend yield2.4%5.8%Annual dividend$4.28$4.44Dividend growth, fiscal 2020-20252.8% a year4.1% a yearDividend record (company’s count)44 consecutive years of increases61 increases in 57 yearsCash dividend payout ratio (TTM to Sept. 30, 2026)40%78%Net debt/EBITDA (LTM)0.3×1.7xInterest coverage (LTM)58.7×10.9x
Source: TIKR, Nov. 5, 2026; dividend records from each company’s third-quarter release.
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Exxon can afford its promises
Exxon’s dividend is well-covered today, using 40% of its free cash flow over the 12 months to Sept. 30, 2026. Exxon produced $19.1 billion of free cash flow in the third quarter alone.
The chart below shows Exxon’s free cash flow swinging far more than its dividend, as dividends paid went from $12.5 billion in fiscal 2016 to $17.2 billion in fiscal 2025:
ExxonMobil Holdings (XOM): free cash flow vs. common dividends paid, $ billions, fiscal 2016–2025 (TIKR)
Free cash flow came in at negative $2.61 billion in fiscal 2020 and hit $58.4 billion in fiscal 2022, and Exxon paid $14.9 billion of dividends in each of those years. By fiscal 2025, the dividend took a much tighter 73.0% of free cash flow.
CEO Darren Woods explained the small raises on the third-quarter call: “we’re not going to ever cut our dividend. So any increases we add becomes an obligation that we’ve got to commit to the future.”
Put $10,000 in Exxon at its 2.4% yield, and it pays $240 a year today. At 2.8% a year, that becomes about $308 in year 10. That’s a 3.1% yield on your cash, and about $2,729 over the decade.
Exxon’s cash flow moves with oil, and Brent crude fell more than 4% on Nov. 3 on hopes that the Middle East supply disruptions would ease.
Altria pays more, with less to spare
Altria flips that picture: a much bigger check, with a thinner cushion behind it.
Its dividend used 78% of free cash flow over the 12 months to Sept. 30, 2026. That’s high, and it’s normal for Altria:
Altria Group (MO): free cash flow vs. common dividends paid, $ billions, fiscal 2016–2025 (TIKR)
Dividends paid ran ahead of free cash flow in fiscal 2016 and fiscal 2017. Free cash flow has covered them every year since, and the payout ratio sat between 74.6% and 82.0% from fiscal 2021 to fiscal 2025.
Altria targets mid-single-digit dividend growth a year through 2028. Its August raise, 4.7% to $1.11 a share, was its 61st increase in 57 years. In the third quarter, shipments of its on! nicotine pouches rose 13.3%, while domestic cigarette volumes keep shrinking.
So $10,000 in Altria pays $580 a year today. At 4.1% a year, that becomes about $834 in year 10. That’s an 8.3% yield on your cash, and about $7,002 over the decade.
So which dividend wins?
If I can only own one of these for the next 10 years, Altria is mine.
At these growth rates, $10,000 in Altria pays about $4,272 more over the decade. Even if Altria never raised its dividend again, its $580 a year would pay more over 10 years than Exxon’s growing one.
I also think Altria can keep raising. It just lifted its 2026 guidance to adjusted earnings growth of 4.5%-6.0%.
It has done that without selling more. Its revenue went from $19.3 billion in fiscal 2016 to $20.1 billion in fiscal 2025:
Altria Group (MO): total revenues, $ billions, fiscal 2016-2025 (TIKR)
Over the same years, free cash flow went from $3.64 billion to $9.07 billion. Holding Altria for 10 years is a bet that pricing and margins keep outrunning the cigarette decline. With pouches growing, I’ll take it.
This isn’t to say Exxon’s dividend isn’t safe. Exxon carries almost no net debt, and its CEO has said it won’t ever be cut. It’s just that Exxon’s coverage swings with oil, and over a decade I’d rather collect Altria’s bigger, steadier check.
Of course, Altria’s dividend goal only runs through 2028. I’ll be watching what it promises after that, and whether pouches can make up for fewer cigarettes.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
Source: www.tikr.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.
