AThe tobacco sector has long been favored by income investors. And, there is good reason why income investors seek out tobacco stocks in particular. Tobacco stocks typically have had highdividend yields, frequently well above 5%. They routinely offer dividend yields that far exceed the average yield of the broader stock market.

Many tobacco stocks have the added ability of raising their dividends on a regular basis, which has allowed investors to generate even greater dividend income over time. The combination of high dividend yields plus dividend growth are why tobacco stocks are held in such high regard among income investors.

This article will discuss three of our top tobacco stocks today that are particularly appealing for investors looking for high yields, plus long histories of dividend growth.

Altria Group (MO)

Altria (NYSE:MO) is the industry leader due to its flagship Marlboro brand, which controls over 40% of U.S. retail market share. Altria is a more diversified company with recent expansions into smokeless tobacco, wine and a roughly 10% ownership stake in Anheuser-Busch InBev (NYSE:BUD). That said, Altria still derives most of its revenue and profit from traditional cigarettes.

In the second-quarter earnings report, adjusted diluted earnings per share (EPS) increased 2.4% to $1.26 year-over-year (YOY). Net revenue stood at $6.5 billion, down 5.7% YOY. Reported diluted EPS stood at 49 cents, down 57.8% YOY. Revenue decreased 4.1% to $5.37 billion YOY.

Meanwhile, Altria reported approximately $750 million remaining under the company’s existing $3.5 billion share repurchase program, which it is expected to complete by Dec. 31, 2022. Additionally, the company reaffirmed full-year 2022 adjusted diluted EPS guidance of $4.79-$4.93. That represents an adjusted diluted EPS growth rate of 4% to 7%.

Altria is a Dividend King, an exclusive group of just 45 stocks that have each increased their dividend for at least 50 consecutive years. Altria has a high dividend yield above 8%. With a target dividend payout ratio of 80%, Altria’s dividend payout appears secure. The company has proven the ability to raise its dividend each year, even during recessions, thanks to its consistent profitability.

We expect Altria to continue growing future earnings, which will in turn fuel continued dividend increases. The company has invested in new categories, such as cannabis and vaping, with investments in Cronos Group (NASDAQ:CRON) and Juul Labs.

Philip Morris International (PM)

Philip Morris International (NYSE:PM) was spun off from Altria in 2008. It owns and operates production and distribution of Marlboro, as well as a collection of other brands, outside the United States. In all, PM owns six of the world’s top 15 international cigarette brands — Marlboro, L&M, Chesterfield, Philip Morris, Parliament and Bond Street.

The company continues to generate steady growth. In the most recent quarter, PM’s revenue increased 3% YOY as shipment volumes rose 3% (excluding PM’s operations in Ukraine and Russia). Adjusted EPS rose 4% in constant currency.

Management revised its fiscal 2022 guidance, expecting adjusted EPS from $5.23 to $5.34 (previously $5.45 to $5.56). Excluding currency effects, management expects adjusted EPS to range from $6.09 to $6.20.

And like Altria, PM is betting its future on new products, although it is taking a slightly different route. PM has invested heavily in development of its heated tobacco product iQOS. Heated tobacco units (HTUs) are increasingly important for PM, as they now constitute over 10% of the company’s total volume. PM’s heated tobacco revenue was up 7.4% last quarter, more than double the revenue growth rate of the overall company.

PM understands the likelihood of a post-cigarette future, which is why the company’s core strategy is to switch smokers from cigarettes to its own iQOS product. The company has reported a high conversion rate of 70% for iQOS, which bodes well for the future.

PM is an attractive income stock due to its 5.2% dividend yield. The company has increased its dividend annually since the spinoff.

Universal Corporation (UVV)

Universal Corporation (NYSE:UVV) is also an appealing stock for income investors, primarily because it has maintained a very long history of annual dividend increases. Like Altria, Universal has increased its dividend for over 50 consecutive years, placing it on the exclusive Dividend Kings list. Universal also has a high dividend yield of 6.2%.

The company has a slightly different business model than most tobacco companies like Altria and Philip Morris International. Universal is the world’s largest leaf tobacco exporter and importer. It is a wholesale purchaser and processor of tobacco that operates between farms and the companies that manufacture cigarettes, pipe tobacco and cigars. Therefore, its financial results are subject to different variables than a manufacturer and distributor such as Altria and PM.

Nevertheless, Universal has maintained a very long history of dividend increases. And the company has maintained profitable even in a challenging industry.

Universal reported strong quarterly earnings on Aug. 3. Revenue was up 23% YOY, while cost of goods rose 22%. That meant gross margins rose 70 basis points to 18.5% of revenue, and adjusted operating income was up 5% to $13.3 million. Ingredients revenue soared 46% higher YOY due mostly to the company’s 2021 acquisition of Shank’s Extracts.

Universal faces a slightly more uncertain outlook. That’s largely because it is fully reliant on traditional tobacco products such as cigarettes and cigars. Whereas other tobacco companies like Altria and PM have diversified into other product areas, this will be much more difficult for Universal. It is not a manufacturer. Universal is attempting to diversify into adjacent agricultural categories, such as with the 2019 acquisition of FruitSmart, an independent specialty fruit and vegetable ingredient processor.

It also acquired Silva International, a privately held dehydrated vegetable, fruit and herb processing company. Silva procures over 60 types of dehydrated vegetables, fruits and herbs from over 20 countries around the world. And as mentioned, the company most recently acquired Shank’s in order to diversify away from tobacco.

On the date of publication, Bob Ciura did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.