Tobacco giant Altria Group (NYSE:MO) has had an exceptionally strong 2016, producing total returns in excess of 20% for shareholders. Yet even with the gains that the company has produced, Altria has plenty of positives looking ahead, and success in the future could produce even more share-price gains in 2017 and beyond. Below, we'll take a look at three reasons why Altria Group shares could have further to climb in the next year.

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Image source: Altria Group.

1. The potential for FDA approval of iQOS could be a game-changer for Altria in reduced-risk products.

No one disputes that traditional cigarettes remain the most important business for Altria. Even with contributions from other businesses such as smokeless tobacco and wine, Altria still relies on the success of Marlboro and other cigarette brands for the vast bulk of its revenue and profit. However, in the long run, many believe that reduced-risk products are a larger potential source of growth for the tobacco industry, and Altria is just one of many companies looking for ways to tap into demand for e-cigarettes and other innovations.

Along those lines, Altria stands to benefit greatly from the move from former subsidiary Philip Morris International to submit an application to the U.S. Food and Drug Administration for its iQOS heat-not-burn technology and related HeatSticks tobacco product. iQOS uses regular tobacco rather than a liquid to produce a more realistic smoking experience, but by heating the tobacco rather than burning it, there's a huge reduction in the amount of toxic chemicals produced. If the FDA grants approval to the application, then Altria will have the rights to market iQOS in the U.S., where the market for the product could be huge. Already, sales of iQOS in Japan have taken market share into mid-single digit levels. Altria has to root for iQOS to pass FDA muster and give it a new avenue for growth.

2. Anheuser-Busch InBev profits could add dramatically to total earnings.

After a long wait, Anheuser-Busch InBev (NYSE:BUD) finally closed on its merger with SABMiller, and Altria is now the owner of a greater-than-10% stake in the surviving beer maker's stock. That will entitle the tobacco giant to include its proportional share of A-B InBev's profits on its own financial statements, and it will also give Altria favorable tax treatment for foreign tax credits related to the beer business.

Investors hope that Anheuser-Busch InBev will do a better job of contributing earnings to Altria than SABMiller did in recent years. After strong performance in the early 2010s, SABMiller's pass-through earnings to Altria had fallen over the past couple of years. A-B InBev's position in the global beer industry will be much stronger than SABMiller's was, however, and that could help power stronger results onto Altria's income statements in the quarters to come.

3. Buybacks are coming.

One consequence of the Anheuser-Busch InBev deal was that Altria received a substantial amount of cash. Although the tobacco company used some of that money to build up a larger stake in the beer maker, Altria also agreed to take some of the cash and increase the size of its current stock repurchase program from $1 billion to $3 billion. As a result, investors can expect that additional $2 billion to get put to work in the next couple of years, with Altria expecting to complete buybacks by the second quarter of 2018.

Altria hasn't entirely given up on buybacks, but the pace of its repurchases had been relatively lackluster lately. Over the past three quarters, Altria has bought back just over $500 million in shares, after posting repurchases of $554 million in 2015. If the company spends its entire authorized amount, that could double the pace of buybacks, in turn providing more support to the stock.

Altria has already produced good returns for investors in 2016. But with many potential positives ahead, shareholders could see further gains in the stock price if Altria can execute well on all of its opportunities.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Anheuser-Busch InBev NV. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.