Alcohol and tobacco are arguably two of the biggest categories in a so-called sin stock portfolio, and Altria (NYSE:MO) and Anheuser-Busch InBev (NYSE:BUD) are each dominant competitors in the U.S. market for their peccadillos.

Despite servicing different vices, the two companies have a lot in common, and though their stocks don't walk in lockstep, shares of both have fallen by 10% over the last three years. Yet as each also sports a healthy dividend yield, Altria and Anheuser-Busch have been favorites of income-seeking investors.

Let's take a look at some metrics to determine which is the better buy, or whether investors should buy both -- or neither.

Paying investors for their troubles

As mentioned, both Altria and Anheuser-Busch pay shareholders a rich dividend, with the former currently yielding 4.8% and the latter 5%. Although their businesses have substantially changed over the years through spinoffs and acquisitions, making the Altria and Anheuser-Busch of today different companies than they were a decade ago, both have been stalwart dividend-payers for years.

Both companies have steadily increased their payouts in recent years, with Anheuser-Busch's generosity exceeding that of Altria's: In the last five years, the brewer's dividend has tripled, while the tobacco giant's has risen 66%.

MO Dividend Chart

MO Dividend data by YCharts.

Yet there are some legitimate concerns about whether Anheuser-Busch can keep up that pace because it has taken on so much debt to finance acquisitions, not least of which was last year's $100 billion purchase of SABMiller. While it's paying down its obligations, the company admits that at least in the short term, growth won't be nearly as generous because it needs to focus on deleveraging.

Growth prospects

Both Altria and Anheuser-Busch are suffering as their respective industries contract around them. The cigarette industry has long witnessed the secular decline of traditional cigarette smoking, and though it's counting on the technology of electronic cigarettes to revive flagging sales, this new revenue stream isn't significant enough yet to offset the revenues lost from combustible cigarettes.

Although Altria has its own e-cigs on the market, it is biding its time waiting for Philip Morris International (NYSE:PM) to receive FDA approval to begin marketing its iQOS "heat-not-burn" device, which will be sold under the Marlboro brand. With renewed attention being paid to the potential risks found in e-cigs, as well as the number of youths attracted to them, even if approval is granted, new technology may not result in the kinds of gains originally hoped for.

The mass beer industry has also seen an ebb and flow for years, but as of late, it is succumbing to changing consumer tastes as drinkers either switch to smaller, more local craft beers or begin experimenting with wine and spirits like whiskey and tequila.

Anheuser-Busch is hoping to capture some of the craft beer industry's spark by having bought out nearly a dozen craft brewers over the past couple of years, but like the broader industry, the larger craft brewers are seeing volumes decline while the smallest continue to report record growth. Anheuser-Busch is doing better internationally, but the U.S. remains its prime market, and sales continue to sag.

Cigarettes on $100 bills

Image source: Getty Images.

Valuing declining businesses

Certainly on the surface, Altria seems to be a better bet since it trades at just 15 times trailing earnings, and 13 times next year's estimates, while Anheuser-Busch sports earnings multiples of 25 times and 19 times, respectively.

Yet the acquisition of SABMiller has thrown the valuations of both companies a curve since Altria recorded a large capital gain from its sale of the brewer's stock that helped to lower its price-to-earnings ratio. The brewer, on the other hand, incurred some substantial acquisition expenses. Moreover, Altria still owns a near-10% stake in Anheuser-Busch related to that transaction, which gives investors something of a two-for-one when they buy shares of the tobacco company.

The verdict

As can be seen, these two companies exhibit almost as many similarities as differences, and Altria's ownership of Anheuser-Busch stock enmeshes them even more.

Still, I'd have to say the evidence leans more in Altria's favor since it has potential for further growth through electronic cigarettes, while Anheuser-Busch can only pull the growth lever by making more acquisitions, which can be a risky pursuit given its current debt levels.

Because of the limitations the brewer is facing in craft beer, Anheuser-Busch is running second to Altria, and since you also get a sip of the brewer when you buy the cigarette giant, Altria becomes the better buy.

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