The tobacco industry has faced a steep decline in the past two decades, but the world's top tobacco companies still offer some of the highest dividends among large-cap stocks. The big three of the industry – Philip Morris International (NYSE: PM), Altria (NYSE: MO), and British American Tobacco (BAT) (NYSE: BTI) – have an average annualized dividend yield of 7.75%. That's head and shoulders above the 1.4% average of S&P 500 listed stocks and it even tops the nearly 4.5% yield of the 10-year Treasury note.

However, income investors should be aware of some key issues before investing in these high-yield stocks. One of them is the significant difference in the share price performance of the big three in the past five years. Philip Morris stock has outperformed its peers by leading the transition to a smoke-free world and offering less harmful alternatives. Altria and BAT, on the other hand, have seen their shares stagnate despite their high yields.

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Source Fool.com