Image source: Altria Group.

Many well-known consumer-goods stocks have produced immense long-term returns from their stocks, and among the best performers are cigarette giant Altria Group (NYSE:MO) and beverage behemoth Coca-Cola (NYSE:KO). A big part of the success of these two companies has been their dividend history, which has included an inexorable rise in the amount that Altria and Coca-Cola pay their shareholders over time. With the stock market recently having climbed back toward new highs, investors are looking for good deals in the market, and they want to know which of these two dividend stocks could be a better fit for their portfolios. Let's take a closer look at Altria Group and Coca-Cola, comparing them on a number of metrics to see which one looks more attractive under current conditions.

Stock performance and valuation
Both Altria and Coca-Cola have posted good gains over the past 12 months. Since April 2015, Altria is the clear winner, giving shareholders a 21% total return including dividends. Coca-Cola has done a good job as well, but its 12.5% total return lags behind Altria's.

When one stock climbs at a faster pace than another, many investors mistakenly assume that the faster-riser's shares must have gotten overvalued. Looking at some simple valuation metrics, however, that doesn't appear to be the case with these two stocks. Using trailing earnings, Altria Group shares trade at about 23 times earnings. Coca-Cola, on the other hand, has a trailing earnings multiple of 27, and so even the slower pace of share-price growth hasn't given Altria a chance to catch up with Coca-Cola.

Investors don't foresee that dynamic changing in the near future. Looking at forward earnings projections, Coca-Cola shares trade at a multiple of almost 22. That compares to just 18 for Altria. Neither of these stocks is particularly cheap on a simple valuation basis, but Altria gets the nod for being the better value right now.

Image source: The Coca-Cola Company.

Altria Group and Coca-Cola have very strong reputations as dividend stocks, and their reputations have been well-earned. In terms of current yield, Altria has a slight edge, paying 3.7% of its current share price in annual dividends. Coca-Cola doesn't lag too far behind, however, with a current yield of 3.1%. Both companies pay about 80% of their earnings to shareholders in the form of dividends, showing their commitment to returning capital to shareholders and their appreciation of the value of dividend income for their investors.

In addition, both Coca-Cola and Altria have long histories of boosting their payouts regularly. Coca-Cola has put together a track record of annual dividend increases that stretches back for 54 years, and its most recent increase in March added 6% to its quarterly payout, now amounting to $0.35 per share every three months. Altria's history of rising dividends goes back 46 years, although it has been complicated by the fact that the tobacco giant has also made spinoffs of former subsidiaries like Kraft Foods and Philip Morris International. Its September increase boosted its payout by 9% to $0.565 per share on a quarterly basis. With dividends, Altria's slight yield advantage offers a reason to pick it over Coca-Cola, but both look strong.

Both Altria Group and Coca-Cola are mature companies, and so many see their growth opportunities as being relatively limited. Yet the companies themselves are working hard to try to find new sources of growth. Altria has been able to use strong pricing in the smokeable products category to keep its earnings rising at a pace that's consistent with the company's long-term goal of 7% to 9% bottom-line growth. Yet Altria also sees cigarette alternatives as a key growth industry, with its MarkTen brand having made considerable progress in building market share and capturing its share of the fast-growing e-cigarette and e-vapor markets. The impending acquisition of SABMiller by Anheuser-Busch InBev could also give Altria some growth opportunities because of Altria's substantial minority stake in SABMiller and its exposure to the beer market.

Coca-Cola has had trouble finding ways to grow, and carbonated soft drinks have been a big drag on its results. In its most recent quarter, revenue fell 4%, pulling net income down 5%, and earnings fell by $0.01 per share from the previous year's first quarter. Water, juice, and other non-carbonated beverages posted solid 7% unit case volume growth, but soda sales were flat, and the company's namesake cola saw sales fall in North America, Europe, and the Eurasia-Africa division. In response, Coca-Cola has turned to strategic alliances to try to find new growth. Investments in energy-drink company Monster Beverage allowed Coca-Cola to profit from allowing its partner to take advantage of its distribution network, and the partnership with Keurig Green Mountain put Coca-Cola into the many homes that will buy the new Keurig Kold product in the coming years. Yet those partnerships haven't yet paid off in Coca-Cola's results.

Both Altria Group and Coca-Cola have some opportunities for growth, but the combination of a higher dividend yield and a cheaper valuation make Altria look like the better buy right now. Coca-Cola needs to prove it can turn itself around fully before investors will feel as confident as they should about the beverage stock's future prospects.