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    Altria Raises Dividend 7.4 Percent

    Discounts on Marlboros help produce largest increase in two years.

    NEW YORK -- Altria Group Inc., the world's largest cigarette maker, boosted its quarterly dividend 7.4 percent, the largest increase in two years, after discounts on Marlboro cigarettes helped profits.

    The dividend was raised to 73 cents from 68 cents, New York-based Altria said in a statement. The dividend is payable Oct. 12 to shareholders of record as of Sept. 15.

    The higher payout signals that CEO Louis Camilleri expects improving tobacco sales to generate extra cash for shareholders. Rival Reynolds American Inc. last week adopted a policy to return 75 percent of annual net income to shareholders as dividends.

    Altria's dividend "reflects the cash-flow growth of the business particularly from domestic and international tobacco, both of which are turning around," said Thomas Russo of Gardner, Russo & Gardner. He helps manage about $2 billion, including 3 million Altria shares, at the Lancaster, Pa.-based firm.

    Shares of Altria, which also owns 84 percent of Kraft Foods Inc., fell 10 cents to $48.71 yesterday in New York Stock Exchange composite trading. They've dropped 16 percent from a high on March 10 as a $280 billion federal racketeering suit against tobacco makers approaches trial in September.

    Altria's dividend increased an average 9.1 percent in the past five years, including a 10 percent boost in October 2002.

    "The market obviously was a little disappointed," David Dreman, who oversees $10 billion, including 16.5 million Altria shares, at Jersey City, N.J.-based Dreman Value Management LLC, said in an interview. "Philip Morris almost never increases its dividend 10 percent unless it has a spectacular year and this is not a spectacular year."

    Altria had $5 billion in cash at the end of June, an increase from $3.77 billion a year earlier, according to company reports.

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