This article is part of our "Best Stocks for 2011" series where our Foolish writers pick their top stock ideas for the year ahead. Click here to see a review of last year's picks and our 12 recommendations for the year ahead.

Most of the years I've participated in this series picking the upcoming year's best investment, I've chosen Altria Group (NYSE: MO). I'm sticking with it for my 2011 pick.

And every year, I'm confronted with the same line: Really? Altria? You're picking a company that hasn't innovated since the 1800s and sells one product with a declining customer base? How's that working out for you?

Answer: Pretty good! Thanks for asking. How's that penny stock you told me about?       

Since early 2009, Altria has returned 95% (including dividends), while the S&P 500 delivered 40%.

Sure, other stocks my Foolish colleagues have picked, including Netflix (Nasdaq: NFLX) and (Nasdaq: AMZN), have done better. Much better. And other companies will outshine Altria next year. By a lot.

But what keeps bringing me back to Altria is not the magnitude, but the consistency of its outperformance. Companies like Netflix and Amazon deliver spectacular returns, but they do it on the back of once-in-a-lifetime trends that are incredibly hard to predict and invariably come to an end just as the masses start catching on. That's the nature of innovation. Here Monday, gone Wednesday. Only a lucky few will find a seat on Tuesday.

Altria is more enduring. You can see this by looking at its outperformance versus the S&P 500 over long periods of time:

Sources: Capital IQ, a division of Standard & Poor's, author's calculations.

Spread the dates on this chart back further, and the difference is simply incredible. Since 1970, Altria has returned 155,300% (including reinvested dividends), versus 4,500% for the S&P during the same period. Go back even further: As Wharton professor Jeremy Siegel notes in his book The Future for Investors, Altria was the single best stock to own from 1925-2003 -- three quarters of a century!

The reason Altria has done so well over such a long period of time surprises many. And it's a reason that remains intact as we head into 2011 and beyond.

This is, of course, a sin company. Many investors are opposed to the sale and marketing of cigarettes. The position is understandable. No one's proud of Altria's accomplishments. Plenty simply refuse to invest in the company, end of story. Those whose ideology allows them to look past Altria's social shortcomings face smoking rates that have been declining for decades and more class action lawsuits than anyone cares to count. This isn't the friendliest of industries.

Predictably, all of this keeps Altria's valuation low. Shares have traded at an average P/E ratio of less than 12 since the early 1990s, which has in turn kept the dividend yield high: typically 5%-10% depending on the mood of the market.

And therein lies the first part of Altria's secret weapon: a continually high dividend yield created by loathing and uncertainty.

Here's the second part. Even though smoking rates have been in decline, Altria's ability to raise prices on its remaining customers has kept cash flow adequate to keep that dividend payout both safe and growing. The dividend has been raised 44 times in the past 41 years.

So add it up.

A high dividend yield combined with one of the most consistent payouts that the market offers. What do you get? A compounding machine. High yield equals lots of shares acquired when reinvesting dividends. More shares equal more dividends. More dividends equal more shares. Rinse. Repeat. Retire.

It's a formula that's worked consistently for the better part of a century, and it isn't in any more danger of backfiring in 2011 than it has for the past many decades.

Disagree? Drop a thought in the comment section below.

Which is the best stock for 2011? See all 12 candidates here.

Fool contributor Morgan Housel owns shares of Altria. and Netflix are Motley Fool Stock Advisor recommendations. The Fool owns shares of Altria. 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.