Altria Group (NYSE:MO) has produced amazing returns for investors over the long run, and the tobacco giant's recent performance has been no less impressive. 2016 marked the fourth straight year of delivering stock market returns of 20% or better, and Altria has hopes to keep that streak alive in 2017. Recently, CEO Marty Barrington and his executive team talked at the Consumer Analyst Group conference in New York and discussed their strategic plans.

A core set of strong brands

Barrington started his discussion of Altria's core tobacco business by noting how well the company has done in concentrating its success in four key brands. In the cigarette segment, Marlboro has led the way for more than 40 years and has the highest retail market share of any cigarette brand in all 50 states. The Black & Mild name is a major player in the machine-made large cigar market, which admittedly plays a relatively small role in Altria's overall business but still rounds out the smokeable products segment well.

Marty Barrington.

Altria CEO Marty Barrington. Image source: Altria.

In smokeless tobacco, Altria relies on Copenhagen and Skoal. Barrington didn't go to great lengths to distinguish the two, but Copenhagen's growth picture has been a lot more attractive lately. Altria has put more resources into making strategic investments in expanding the Copenhagen brand, with releases of new flavored products competing effectively against competitors. Combined, Copenhagen and Skoal command more than half of the smokeless segment.

For core tobacco, Altria intends to keep maximizing income from the segment for as long as possible. That strategic plank will play a vital role in the company's overarching goals of 7% to 9% growth in adjusted earnings per share and a dividend payout ratio equal to about 80% of earnings.

Looking to innovation for further growth

At the same time, Altria recognizes that its core business isn't the only direction in which the company can go to look for growth. Altria has also sought to grow new income streams by using innovative tobacco products, including some that have the potential to have reduced harm profiles. Among the technologies that Altria has actively pursued are e-vapor and heated tobacco.

On the heated tobacco side of the equation, Altria's agreement with Philip Morris International will give the U.S. tobacco giant the right to commercialize the iQOS heated tobacco system if it becomes available in the U.S. market. The U.S. Food and Drug Administration is currently weighing Philip Morris' application to have iQOS approved in the U.S. under the modified risk tobacco product guidelines, and Altria is supporting its former subsidiary's efforts in promoting the application and seeking its approval. At the same time, Altria is also learning from test markets like Japan in figuring out how it could best market iQOS if and when it becomes available domestically.

Elsewhere, e-vapor has become a key growth area for Altria, with COO Howard Willard noting that the Nu Mark subsidiary and its MarkTen brand had a great year in 2016. With a dramatic uptick in marketing and distribution efforts, MarkTen is now available nationally and was the fastest-growing vapor brand in the fourth quarter of 2016. Despite some concerns about total consumer spending in the category starting to flatten out, Altria still thinks that there's potential for the category going forward.

Rounding out the portfolio

Finally, CFO Billy Gifford noted how Altria's diversified portfolio of products gives it multiple income streams that lead to cash flow and profit. Now that the SABMiller deal has been completed, Altria now has a more than 10% stake in what it called "the world's first truly global brewer," Anheuser-Busch InBev (NYSE:BUD). Gifford related how Altria "is excited about the long-term prospects of our ABI investment and look forward to continued engagement with their talented management team."

Moreover, the Ste. Michelle Wine Estates business has seen solid growth as well. Despite being a small part of Altria, its growth rates often exceed those of the larger segments. As the Chateau Ste. Michelle winery in Washington celebrates its 50th anniversary, Altria looks forward to the wine business being part of its portfolio for a long time to come.

Altria has been rewarding for long-term shareholders, and the company remains committed to finding ways to bolster its growth well into the future. With this core set of strategic plans, Altria is setting the stage to combine effective management of its current products with growth potential for innovative new offerings to customers.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Anheuser-Busch InBev NV. The Motley Fool has a disclosure policy.