As Foolish investors are no doubt aware, tobacco stocks are investor favorites because of their remarkable stability and high dividend yields. Despite the travails of the tobacco industry in recent decades, Tobacco majors enjoy pricing power and low capital expenditure requirements. The result is high free cash flow generation which gets passed on to shareholders in the form of high dividend payouts.

As we shall soon see, Altria Group (NYSE:MO) is the perfect embodiment of these qualities. Which is why Altria managed yet another dividend increase, recently. 

Altria's amazing dividend history
On Aug. 21, Altria increased its dividend by 9%, to $2.26 per share on an annualized basis. There have now been 49 dividend increases for Altria in the past 46 years, a tremendous track record of reliable dividend growth.

MO Dividends Paid (TTM) Chart

MO Dividends Paid (TTM) data by YCharts

In 2014 alone Altria raked in $4.6 billion in operating cash flow. It needed just $163 million in capital expenditures. This speaks to what a low capital-intensive industry Altria is in. Tobacco companies have low capital requirements from year to year and aren't allowed to advertise in the United States. The result was $4.5 billion of free cash flow for Altria last year.

Altria distributes the majority of its free cash flow back to investors. The dividend cost the company $3.8 billion last year, equating to an 84% free cash flow payout ratio. But it can continue to raise its dividend, for two key reasons. 

Pricing power yields steady growth
Even though smoking rates are on the decline in the United States, Altria continues to grow revenue. How, you ask? Altria's strong pricing power and leading brands. In the U.S., Altria operates Marlboro, a premier brand, and Marlboro alone captured a record 44.2% market share for Marlboro last quarter, up 30 basis points year over year. Separately, it realized a 51.1% combined market share last quarter for its key smokeless brands, Copenhagen and Skoal, up 10 basis points year over year.

Then, of course, selling an addictive product allows Altria to raise prices from year to year. Higher pricing and greater market share allowed revenue in Altria's smokeable-products category, net of excise taxes, to rise 7% last quarter and over the first two quarters of the year, versus the same periods in 2014. In the smokeless category, net of excise taxes, revenue grew 3% in the first half, year over year.

A dividend program you can bank on
Altria's management maintains a clear dividend policy, which is to return approximately 80% of adjusted diluted earnings per share to investors each year. For 2015, Altria projects full-year adjusted diluted earnings per share to come in between $2.76 and $2.81 per share. That represents at least 7% growth from 2014, which gave the company enough flexibility to raise its dividend once again. At $2.26 per share annually, Altria's forward dividend represents 81% of its diluted EPS forecast, at the midpoint of the range. 

Altria currently yields 4.3%, and offers a unique blend of dividend yield and dividend growth. Dividend-minded Foolish investors should be wise to take a close look at Altria.