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Source: Altria.

Over the long haul, tobacco giant Altria Group (NYSE:MO) has been one of the best-performing stocks in the market. The company's ability to remain resilient in the face of immense challenges on the legal and regulatory front has been a big part of its long-term success, and in 2014, the stock continued its winning ways with a solid gain of almost 35%.

Yet this year, Altria has faced a much tougher time producing share-price increases for its investors, and the tobacco specialist managed a total return of only 1% in the first half of the year. Let's look more closely at what's behind Altria Group's performance so far in 2015 and what's might happen to heat up the stock once again.

Altria sees its early gains go up in smoke
The first three months of 2015 were substantially positive for Altria, with the stock climbing more than 10% by early March as investors digested reasonably solid results in its fourth-quarter financial report. Cigarette sales volumes continued their long-term trend by falling 1.7% from the year-ago quarter, but increases in prices allowed Altria to boost its overall revenue by nearly 3%.

For the full 2014 year, Altria saw earnings per share rise by 8%, and strength in the smokeless and wine segments helped create a more optimistic mood among shareholders. Projected earnings growth of 7% to 9% for 2015 earnings wasn't quite as much as some investors had expected, but it nevertheless reveals the steady pace at which Altria has kept growing its business.

Altria has also benefited from investor demand for income-producing stocks in defensive industries. Altria has noted that the recent drop in gasoline prices has given customers more disposable income to spend on cigarettes, and that has made some investors more optimistic about Altria's ability to continue to raise its dividend steadily over time. Earnings multiples for Altria and similar dividend giants have been at premium levels lately, and that trend definitely contributed to Altria's early gains in 2015.

As 2015 has progressed, though, Altria has given back most of its share-price increase despite good fundamental performance. In its first-quarter financial report, Altria topped investor expectations on the earnings and revenue fronts, with cost-cutting measures helping to bolster the bottom line while price increases actually supplemented a rare increase in cigarette sales volume at Altria's Philip Morris USA unit.

What seems to be pulling Altria back is the recognition that a rising interest rate environment would likely put pressure on the company's stock. Because of what many investors perceive as limited future growth prospects, Altria can behave like a fixed-income investment, and the bond market has seen a dramatic increase in volatility as investors try to position themselves for the Federal Reserve's coming initial boost of short-term interest rates.

Several other high-yield dividend stocks have seen similar behavior lately, and as a result, Altria hasn't always traded in line with what its business results might suggest was appropriate.

What's ahead for Altria?
In the long run, Altria is positioning itself to take advantage of new markets. Its Nu Mark subsidiary has jumped into the alternative-products realm, with its MarkTen e-cigarette line having seen a massive ramp up of marketing efforts in order to make products available to a wider range of customers. Thanks to those efforts, MarkTen is now available in 130,000 retail locations across the country, and Altria is also looking at a potential new rollout of its MarkTen XL e-vapor product following testing in a small number of local markets.

Yet for the foreseeable future, Altria needs to keep executing well on its strategy of making the most of its traditional cigarette business. The company's key Marlboro brand has sustained its market-share leadership throughout the industry, but Altria has also seen a rise in interest in discount-cigarette lines among those seeking a less expensive alternative. By balancing the needs of its various customers, Altria should be able to find the best way to maximize profit throughout its sales base to ensure continued success.

After such a strong 2014, Altria investors shouldn't be too disappointed with the way the tobacco giant has started 2015. If the company manages to keep moving in the same strategic direction it has followed for years now, Altria has plenty of potential to give investors the dividend increases and share-price gains they've come to expect.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.