Reynolds American (RAI) and Altria (MO -0.93%) are similar companies. They both sell tobacco and related products within the U.S., and they both look after their shareholders.

What's more, both Reynolds and Altria trade at similar valuations and offer similar dividend yields. Reynolds trades at a forward P/E of 15.5 and Altria trades at a forward P/E of 14.6. The companies support dividend yields of 4.8% and 4.8%, respectively.

However, if you had to choose between Reynolds and Altria, which one should you pick?

Diversified option
When it comes to the question of long-term growth, Altria is without a doubt better positioned than Reynolds. Altria's diversification outside of the tobacco sector is really attractive. Along with its tobacco business, Altria owns a near 30% economic interest in SABMiller.

Since 2008, Altria's annual income from its share of SABMiller has expanded at a compounded annual growth rate of approximately 16%. The investment now contributes $991 million to Altria's bottom line. Over the same period, Altria's income from smokeable products has grown at a compound annual growth rate of 4.2%.

Altria's other alcohol interests include ownership of the Ste. Michelle wine company, which contributed $609 million to the company's sales in fiscal 2013.

These two business interests outside of the tobacco industry give Altria a certain amount of diversification, and for that reason the company appears to be a better long-term investment than Reynolds.

While Altria appears to be the more diversified play, however, there is a possibility that Reynolds could become the prey of its larger peer and partner, British American Tobacco.

British American owns around 50% of Reynolds, but the company has been barred from acquiring more of the company via a standstill agreement signed ten years ago. This agreement expires within the next few months, however. British American could swoop on Reynolds as the company looks for acquisitions to boost its flagging growth.

Of course, buying a company's stock just because of its takeover prospects is never a good idea. Investors should examine Reynolds' underlying business as well.

Reynolds' main business is tobacco, and the company has few assets outside the industry. This leaves it exposed to the cigarette industry's decline.

The one part of Reynolds' business that does appear to be growing well is the company's Santa Fe Natural Tobacco division, which reported a 10.7% jump in volume of cigarettes sold during the first quarter of this year.

The income question
While Altria may seem better positioned for long-term growth, investors should also consider shareholder returns.

Tobacco companies are well known for their shareholder returns, and both Reynolds and Altria support hefty dividend payouts and are spending billions to buy back stock.

That said, both companies support similar yields, so it's not enough to just compare their payouts. Looking at 2013 numbers, Reynolds returned a total of $2.1 billion to investors through both buybacks and dividends. Based on the number of shares in issue at year end, this works out to around $3.8 per share, equal to a yield of 6.8% at present levels.

Meanwhile, Altria returned a total of $4.2 billion to investors or around $2.1 per share, which equals a yield of 5.2%.

Foolish summary
Overall, Altria would appear to be the better pick when it comes to the question of growth. However, Reynolds' equivalent yield of 6.8% is attractive. Despite this, Reynolds' future growth will be stunted as the company is highly dependent upon cigarette sales as its main source of income.

On the basis that Reynolds' growth is likely to come under pressure as cigarette sales decline, Altria seems to be the better pick for long-term growth.