Altria (MO -0.66%) as a stock, is not that attractive to investors. Over the past five years, the stock price has increased by about 10% cumulatively. Probably the main thing that attracts investors to Altria is its ultra-high 7% dividend yield and the fact that the dividend has increased every year for several decades now.

But this enviable return may not be as good as it seems.

Investors interested in dividends (and earning a high yield) might be better off looking at stocks like Real estate income (O -1.24%) Or Vici Properties (VICI -1.01%)which have yields of 5.6% and 5.4%, respectively. Here’s why these two high-dividend stocks could both be better picks than Altria today.

What does Altria do?

Altria’s core business is the sale of tobacco products, and only one tobacco product (cigarettes) represents approximately 88% of the company’s turnover. On top of that, a single cigarette brand, Marlboro, accounts for about 90% of the smoking products sold by Altria. In many ways, this business is a one-trick pony.

In all honesty, Marlboro is the leading brand in North America, the region where Altria’s business is concentrated, with a market share of almost 42%. This makes Altria’s “thing” pretty good in some ways. But there’s a not-so-minor problem: The company’s cigarette volumes have been steadily declining.

During the first nine months of 2024, cigarette volume decreased by 10.6% year-on-year. This is a worrying figure and the continuation of a multi-year trend towards declining volumes.

Altria has been able to offset declining balance sheet volumes with regular price increases, allowing it to increase its profits each year and fund increases in its dividend each year. But the core business appears to be on the verge of final decline. Dividend investors should exercise extreme caution as this company’s continued dividend growth is at risk.

Conservative investors will definitely want to consider other options, which brings us to a discussion of Realty Income and Vici Properties.

Two high-yielding REIT alternatives to Altria

Realty Income and Vici are net rents real estate investment trusts (REIT). A net lease requires the tenant to pay most of the operating costs at the property level. This is clearly a very different economic model from a consumer goods company like Altria. Both of these REITs have significant dividend yields, so they will likely appeal to the same types of investors. It’s worth noting that these two REITs are growing their businesses slowly and steadily over time, unlike Altria, which is dealing with a declining core business.

Realty Income is the more conservative of the two choices. Its 5.6% dividend yield is supported by a portfolio of properties spread across the retail (73% of rents), industrial (17%) and a large “other” category (the rest, which includes things like wineries and casinos).

Additionally, the portfolio spans both North America and Europe, making Realty Income one of the most diversified REITs you can buy. It currently owns more than 15,400 properties, but had around 13,200 assets a year ago.

This big jump is not normal and was linked to an acquisition. Rather, slow and steady growth is the norm. And this slow but steady growth has helped it increase its dividend every year for three decades at an average annualized rate of 4.3%.

Realty Income’s size (it is the largest net rental REIT) and financial strength (its balance sheet is rated as an investment), provide it with broad access to capital to support slower, steadier long-term growth from here (and occasional large acquisitions). If you’re looking for a financially strong and conservative dividend payer, Realty Income will probably be a better fit for you than Altria.

If one of the things that attracted you to Altria is its classification as a “sin” stock, you might actually find Vici Properties more attractive than Realty Income. Vici Properties bills itself as an experiential REIT, which is true, but its primary property type is casinos.

Casinos are grouped into the category of “sins”, just like cigarettes. Vici Properties is a much younger company than Realty Income and only went public in early 2018. That said, it has increased its dividend every year since its initial public offering (IPO).

Vici Properties’ portfolio is very concentrated, with two tenants (MGM Resorts And Caesars Entertainment) representing approximately 75% of the rent. But these two tenants are two of the largest casino operators in the world. It also has 11 other tenants, some of which operate decidedly outside the casino space.

It’s a sign of the direction management is going, as it looks to use its strong casino foundations to move beyond the gaming real estate niche. This is where long-term growth is most likely to come from. Vici Properties’ portfolio is concentrated because the casino sector is quite concentrated.

However, it is important to remember the saying “the house always wins”. Even though the casinos were closed at the start of the pandemic, Vici Properties was able to increase its dividend because the casinos continued to pay the rent they owed. So far, Vici Properties and its 5.4% yield have proven to be very reliable, and there’s no reason to think that’s going to change anytime soon.

Which is more important, output or activity?

A dividend is only as reliable as the company that backs it. Currently, Altria is performing strongly, but its business is in long-term decline. Only the most aggressive investors will want to consider it.

If you’re looking for reliable dividends, Realty Income is probably a better and much more conservative option. If you like the “sin” angle, you’ll probably find that Vici Properties’ growing (and diverse) property list lets you sleep better at night than holding Altria in your portfolio.