This 6% Yielding Stock Has Grown Its Dividend for 54 Consecutive Years. Is The Streak About to End? 

When the subject of AI arises, much attention has been focused on Nvidia (NASDAQ: NVDA) and AMD (NASDAQ: AMD), as they are the best known designers of GPUs, which are essential for the data processing power required to make AI a reality. Similarly, when the topic of cigarettes comes up, Altria Group’s (NYSE: MO) Marlboro and Gitanes from British Tobacco plc (NYSE: BTI) will often top many smokers’ lists. 

However, neither Nvidia nor AMD make the GPUs that they design and sell. Instead, the meticulous work involved in building these complex and expensive digital processing products is all conducted by Taiwan Semiconductor (NYSE: TSM).  Both companies’ stocks would plummet if their supply was disrupted by an invasion of Taiwan by China, which is another reason for TSM’s investment in new US based factories in Arizona. 

Likewise, neither Altria Group nor British Tobacco plc produce their own tobacco or assorted blends. Both industry titans source their tobacco from Richmond, VA based Universal Corporation (NYSE: UVV). With a history dating back to its founding in 1886, Universal Corporation is a Dividend King stock, meaning it has annually raised dividends for over a half century – 54 years in Universal Corporation’s case. 

UVV and its Dividend King Track Record

With only 55 companies presently making the Dividend King list, Universal Corporation is in elite company.  The wherewithal to continually increase dividends for such a long span of time is a testament to a company’s solid management, business model, and earnings generation capacity. 

Richmond, VA based Universal Corporation sources, procures, processes, stores, and distributes various tobacco types, such as flue-cured, oriental leaf, burley, and dark air-cured. Other services include custom blending, physical and chemical testing, liquid nicotine extraction, manufacturing with reconstituted leaves, and other tobacco processing specialties.

Over the last 140+ years, Universal Tobacco has expanded its operations globally, with various past and current operations in the US, Canada, Greece, Italy, Malawi, China, Philippines, Korea, Brazil, Turkey, and Mozambique. 

UVV’s most recent Q2 2025 results showed impressively strong demand for the company’s tobacco products. The company reported over $710 million revenues for Q2, and unfailingly made another dividend payment, and the stock’s yield, at the time of this writing, is holding between 5.96% and 6.01%. 

Is the Streak in Danger?

As Universal Corporation currently relies on tobacco for 90% of its revenues, it does face some risks because of the small number of mega players with whom it transacts. 60% of UVV’s revenue comes from its 6 largest customers. The company’s 10.7% margins still give it a substantial 20% advantage over its rivals, but should any of the customers feel pressure to lower costs, UVV would be hard pressed to deny them. As UVV’s pricing needs to stay within commodity market price ranges to keep the customers from going elsewhere, it doesn’t have the luxury to raise prices, nor does it have an established brand of its own that it can monetize through merchandising or other revenue stream platforms. 

By all accounts, cigarette smoking is trending down, globally. Statistics from the World Health Organization (WHO) show that 1 in 3 adults worldwide smoked in 2000, and had reduced to 1 in 5 by 2022. Conversely, Skyquest reported that the global tobacco market size was $872 billion in 2023 and on track to grow to $899.9 billion by the end of 2024, further growing to $1.157 trillion in 2025-2032 at a CAGR of 3.2%. The bulk of the growth is anticipated to come from China and India. 

Universal Corporation still has a demographic market of roughly 1.25 billion cigarette smokers. However, its other operations are monetizing tobacco in other avenues. For example, liquid nicotine, a component for many of the liquids supplied in e-cigarettes for vaping, which continues to gain in popularity, is represented by UVV’s AmeriNic. Other customized tobacco processing operations and digital apps to monitor them are still integral to UVV’s business. 

Additionally, UVV branched out into growing and processing vegetables, fruit and other agricultural products in 2020. The company’s acquired operational divisions have expanded to include: 

• FruitSmart: Produces juices, concentrates, blends and purees, along with dehydrated slices, dices, pieces, fibers, seed and seed powders, to food, beverage and flavor companies worldwide.
• Shank’s: A supplier of vanilla extracts and other natural and artificial flavors, food colors, syrups and sauces for industrial, private label, and grocery customers. 
• Silva International: Provides natural dehydrated vegetable, herb, spice, and fruit-based ingredients for cooking and other food product processes. 

Hedge Fund and Institutional Support

Universal Corporation appears to be transitioning from being a one trick pony tobacco supplier into a multiple product supplier of ingredients for a broader range of end use consumers. The strength of its Dividend King status is keeping thousands of happy investors in the fold, and institutions apparently don’t have any near term concerns. 85.92% of the stock shares are controlled by institutions, and 2 additional hedge funds have since joined the previous 12 who owned shares as of the beginning of 2025. 

Among the 5 largest institutional shareholders are:

• BlackRock: 15.63%
• Vanguard Group: 11.80%
• Dimensional Fund Advisors, LP: 7.56%
• State Street Corp.: 5.02%
• Invesco Ltd.: 4.03

The post This 6% Yielding Stock Has Grown Its Dividend for 54 Consecutive Years. Is The Streak About to End?  appeared first on 24/7 Wall St..