While smoking in the United States is at perhaps the lowest levels ever, the habit is still widely practiced around the rest of the world. With the social stigma of smoking nearly everywhere now, smokeless tobacco products and e-cigarettes have become an important component for the major domestic players. A new report from RBC highlights multiple catalysts for 2015 and features three top stocks rated Outperform.

Like many “sin stocks,” some investors are put off by the concept of owning stocks from firms that sell products that harm people. The fact of the matter is, the tobacco companies are constantly looking for new avenues and products to replace the customers that have given up traditional cigarette smoking. Three very innovative companies highlight the RBC list.

Reynolds American Inc. (NYSE: RAI) is the top pick at RBC, and they see large upside potential for the stock. Having purchased Lorillard this past summer for a staggering $27 billion, the company is poised to take on the headwinds of competition emerging in the marketplace. The RBC analysts feel the combined company will create immediate value for shareholders. While regulators may not allow the deal to close in its current form, and divestiture of product lines is a given, the overall new company should be a solid investment for years.

Reynolds American shareholders are paid a very solid 4.05% dividend. The RBC price target for the stock is $78. The Thomson/First Call consensus price target is at $69. Shares closed Wednesday at $65.67.

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Lorillard Inc. (NYSE: LO) is a tobacco stock best known for being the industry leader in menthol cigarettes with the Newport brand, and it is an alternative way for investors to play the gigantic deal with Reynolds American. Ultimately, investors are really buying the combined entity, with Lorillard shareholders receiving a minimum of $68.88 per share if regulators give final approval. The RBC team feels that the minimal competitive interaction between the cigarette portfolios of the two companies is a reason to expect that the Federal Trade Commission will ultimately give its approval.

Lorillard investors are currently paid a tidy 3.9% dividend. The RBC price target is $70, and the consensus target is $64. Shares of Lorillard closed Wednesday at $63.02.

Altria Group Inc. (NYSE: MO) is the third top tobacco stock to buy at RBC, and the company’s Marlboro brand is one of the most recognizable in the world. The RBC analysts believe the stock has solid downside support owing to the generous dividend yield, which remains at a huge premium in relation to the 10-year Treasury rate. Cash flow generation and the return of cash to Altria shareholders remain key facets of the company’s total shareholder return. Analysts also expect support of the strong dividend, which they believe will continue to climb, and strong share repurchase activity ($800 million estimated in 2014).

Altria shareholders are paid a 4.1% dividend. The RBC price target is $51. The consensus estimate is $48.44. Altria closed Wednesday at $49.99, so both of these targets may be poised to go higher.

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These are solid holdings for long-term growth and income portfolios. With superior dividend yields and growth potential, they make good sense for more conservative investors.

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