High-Yield Stocks That Could Wreck Your Retirement: Altria (MO)
Dividend Yield: 3.4%
It’s easy to see why Marlboro cigarette maker Altria Group Inc (NYSE:MO) has been a popular high-yield retirement stock since time immemorial. It’s a consumer staple that is largely immune to the ups and downs of the economic cycle. During recessions, smokers might actually light up more often due to the additional stress.
There is a big problem with depending on a stock like Altria to pay your bills in retirement, however: Cigarette use is in terminal decline across the world. American teenagers are more likely to use an illegal drug than to smoke a cigarette. The percentage of the population gets smaller every year.
But as bad as that might be, my biggest reason for steering clear of Altria is its price. It’s simply too expensive at current prices. The stock trades for 20 times next year’s earnings and yields just 3.4%.
For a company in terminal decline, that’s simply not high enough yield to warrant serious consideration.