How Long Can High-Yield Altria Continue to Grow Its Massive Dividend Payment?

Altria's (NYSE: MO) main business is in decline. Management knows this, and has opted to treat its core cigarette operations as a cash cow, investing a portion of the cash flow generated for the future and passing much of the rest on to shareholders in the form of dividends. The yield is a very high 8.6% -- compared to the 1.6% or so you'd get from an S&P 500 Index fund. Better yet, the dividend has been growing steadily for over a decade. But given the cigarette industry's woes, how long can Altria support a growing dividend?

For dividend investors attracted to the high current yield here, the first question is likely to be about dividend safety. The answer to the question is going to be nuanced, because if you use the standard payout ratio as a gauge of safety you'll probably want to run from Altria stock as fast as you can. The company has been paying out more than 100% of its earnings as dividends for a number of years now.