The business of selling cigarettes seems to be going up in smoke. Consumption has fallen at a rate of 2 percent a year for the past 30 years...

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The business of selling cigarettes seems to be going up in smoke.

Consumption has fallen at a rate of 2 percent a year for the past 30 years.

Tobacco taxes, anti-smoking campaigns and laws restricting smoking in public have accelerated the decline.

In a symbolic loss of prestige, Dow Jones recently removed Altria Group (MO), the former Philip Morris, from its industrial average, to reflect the company’s smaller size since the spinoff of Kraft Foods.

Still, Altria, owner of the country’s most popular cigarette brand, Marlboro, has been a solid investment, rising 14 percent in the past year.

Tobacco stocks are defensive, meaning they can do well even in recessions. They also pay high dividends; Altria yields 4.2 percent. Of course, some investors shun tobacco on principle.

In March, Altria will split off its non-U.S. tobacco business into a new public company.

The remaining U.S. business will grow profit by 9.8 percent in 2008 in the United States, estimates Goldman Sachs analyst Judy Hong.

Altria, she says, has demonstrated that it can become a “total tobacco” company through growth and acquisitions.

Its $2.9 billion acquisition of John Middleton Cigar last year delivered on a promise to expand outside cigarettes.