Altria Lights Up

Tobacco giant Altria (NYSE: MO) continues to maintain an outlook similar to the one it held three months ago, when it was expecting a 3% to 4% full-year decline in total cigarette-industry volume. Although the trend is certainly not positive, I don't think the outlook for shareholders could be any better.

On Wednesday, the company announced an 18.1% surge in its third-quarter operating earnings on an 8.9% increase in revenue versus its year-ago quarter. Being in a global market with only a few other major players, such as Reynolds American (NYSE: RAI), Carolina Group (NYSE: CG), British American Tobacco (NYSE: BTI), and Imperial Tobacco (NYSE: ITY), Altria and its peers can charge whatever they want for their products, and consumers have little choice but to fork over the additional coin to satisfy their dependency.

Aside from favorable pricing, other positive developments during the quarter included Altria's decision to raise its regular dividend by 8.7% and its announcement that it intends to split off its Philip Morris International tobacco business. The increased dividend now gives Altria a 4.2% yield, which should continue to look attractive to income investors. The decision to spin off PMI is another sound management decision that follows a successful spinoff of Kraft (NYSE: KFT) and should ultimately result in a higher valuation of PMI for shareholders.

Altria's ability to slightly raise its full-year forecast based on Q3 results is a telling signal that the company is emerging relatively unscathed from negative volume trends. This stock continues to present decent upside potential, thanks to its room for growth overseas and the company's foray into the smokeless-tobacco arena. Altria shares have been relatively flat as of late, and last year around this time, I found the company to be selling at a deep value. The company has returned nearly 21% since then (adjusting for the Kraft spin-off), and I continue to think this company is a great blue-chip company for Fools who want a consistently performing stock.

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