Tobacco maker Reynolds American's (NYSE:RAI) stock price has been relatively stagnant since I recommended it in the fall, but the release of the company's quarterly earnings today may be the light that shareholders were looking for. Reynolds' first-quarter revenue rose 9.6% to $2.15 billion, while its adjusted EPS surged 16.8%.

The company's biggest Q1 weakness was its cigarette shipments, which decreased 4% year over year as Reynolds American lost market share. That trend's not great, but I continue to be bullish on this stock in the long run for the same two reasons I cited for Altria (NYSE:MO) last week: pricing power and dividends.

Reynolds noted that "unusually strong" margins for the cigarette division drove the increase in adjusted EPS. The company's favorable pricing supports the notion that tobacco companies can continue to hike their prices, leaving consumers who consider cigarettes essential no choice but to fork over the additional money.

Reynolds' dividend yield rests at a healthy 4.7%, and its quarterly dividend has increased by 58% in the past two years. Its smokeless tobacco division, Conwood, provides an additional benefit over rival Altria. Both of Reynolds' divisions delivered double-digit profit growth, but Conwood increased both market share and volume as its pro forma profits rose 18% year over year.

Reynolds' future prospects remain bright for shareholders. Management upped its full-year earnings forecast by $0.15, to a range of $4.40 to $4.60 per share, and the company expects to save $75 million to $100 million this year on "productivity initiatives." The premium segment of the smokeless tobacco market should continue to prosper for Reynolds American, as it did in its first quarter, and as it's done in recent quarters for competitors UST (NYSE:UST) and British American Tobacco (NYSE:BTI). Meanwhile, the company's significant investments in marketing initiatives should continue to protect its strong positioning in both the cigarette and smokeless tobacco markets for some time to come.

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Fool contributor Billy Fisher owns shares of Reynolds American and Altria. The Fool's disclosure policy is smoke-free.