Altria (MO -0.10%) and Procter & Gamble (PG 0.17%) own consumer brands that are household names. But they operate in very different spaces, and that changes the investment equation in a material way. Altria's huge 8.1% dividend yield may be more enticing than the 2.4% on offer from P&G, but yield alone doesn't tell the whole story when you are looking at this pair. 

Those dividends

Income investors tend to focus first and foremost on dividend yield. That's understandable, as a higher yield means generating more income from your portfolio. On this front, Altria is the hands-down winner, given that its yield is more than twice as high as what you'd get from owning Procter & Gamble. And yet P&G is a Dividend King with over six decades of annual dividend increases behind it. Altria's dividend streak is 14 years long.

PG Dividend Per Share (Annual) Chart

PG Dividend Per Share (Annual) data by YCharts

Yes, you'll get more yield from Altria, but P&G has proven to be a far more reliable dividend stock. That's backed up by the company's impressive portfolio of consumer staples brands, including Bounty, Tide, and Gillette, among many others. These are products that consumers buy regularly. But the catch is that P&G's offerings tend to sit at the high end of the market. It has a focus on innovation that helps to differentiate its products from those of peers and justifies higher price tags.

This is a core tenet of the company's approach, layered on top of its marketing, distribution, and production strengths. New and improved are two of the most important drivers of customer demand, which is why P&G is a vital partner for retailers. There's nothing to suggest that the company's strong industry position and ability to keep growing its dividend are at any risk.

Bleeding the cow dry

While Altria has iconic brands -- it sells Marlboro in the United States -- it is a tobacco company. Retailers actually shun this product category. To be fair, Altria's customers tend to be very loyal, but that's not exactly because they believe its products are somehow better than the alternatives. And the longer-term trend has long been toward fewer people smoking, so the company's market is really shrinking.

To offset the drop in customers, Altria has been steadily raising prices. So far that's worked out fairly well, but there is likely to be an inflection point sometime in the future when charging fewer customers ever-higher prices no longer pays off. In the meantime, Altria has been trying to find alternative businesses where it can grow. Its efforts in vaping and marijuana have both been disasters for shareholders, resulting in billions of dollars worth of write downs. 

It just inked a deal to buy NJOY, trying one more time in the vaping space. NJOY's products are further along than Juul's were when Altria invested in that company, so maybe NJOY works out better. But given past failures, that's not a bet that conservative investors will probably want to take on. 

And then there's the not-so-subtle fact that Philip Morris International (PM 0.09%), which was spun off from Altria to own its non-U.S. operations, is now a competitor in the U.S. market for smokeless products. Altria set up what is likely to be one of its biggest competitors in the space that it is looking to for growth beyond cigarettes. That's another strategic misstep to add to the list. While the huge dividend is likely to be safe in the near term, it is far from certain that it can be sustained over the long term.

Boring is better

Altria's giant yield is attractive, but the outlook for the company is hazy at best. Investors need to tread with extreme caution if their holding period is likely to be counted in decades. Procter & Gamble, despite a lower yield, has been a better dividend stock over the long term. And there's no reason to expect anything to change with its industry-leading business. That, for most investors, will be a more attractive, though more boring, alternative.