Altria Group Inc. (NYSE: MO) is at it again with a dividend hike. The news looks great on the surface. However, we are still a bit shocked at how little relative yield investors are accepting for tobacco dividends these days.

Altria announced on Thursday that its board of directors increased its dividend by 8.3% to $0.52 per share per quarter, up from the previous total of $0.48 dividend. The new annual dividend of $2.08 per share generates a yield of 4.9%, based on Altria’s most recent closing price of $42.46. Altria said that it has a dividend payout ratio of approximately 80% of its adjusted diluted earnings per share. We have expected that this will potentially rise to 85% in past reports.

For a comparison of the soon-to-be larger Reynolds American Inc. (NYSE: RAI), that tobacco giant has a yield of closer to 4.3%. This is relatively the same yield as Verizon. Reynolds is in the process of merging with Lorillard in a $25 billion to $27 billion deal. Reynolds currently has a market cap of about $31 billion, so the deal will help to close its market cap gap against Altria’s $84 billion.

Another key issue stood out here for investors who really like companies to raise their dividends. Over the past 45 years, Altria has increased its dividend 48 times. How is that for a Dividend Aristocrat?

Raising your dividend is almost always commendable if the company can afford it. That being said, telecom giant AT&T has a yield of 5.2%. Does it seem right that a tobacco giant has this much of a lower yield than a telecom giant?

At $42.65 after the report, Altria’s shares have a 52-week range of $33.12 to $43.70, and the consensus share price estimate from analysts is $43.11.

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