"The Group delivered exceptional earnings, volume and market share growth in 2016, despite challenging trading conditions persisting in many of our Key Markets," said chairman Richard Burrows. "Our results this year demonstrate our ability to continue delivering excellent shareholder returns while investing in the future strength of the business."
"The 10% increase in our total dividend for 2016 to 169.4 pence reflects our confidence in our strategy, our people and in generating growth for our shareholders in 2017 and beyond," he added.
Earlier this month, Reynolds posted fourth quarter earnings Thursday that topped Wall Street's forecasts and allayed some concern by the company's penchant for missing its profit goals.
Its fourth quarter numbers came in at 62 cents a share, on an adjusted basis, ahead of the 60 cents that Wall Street had forecast. Sales rose just over 4% to $3.19 billion, easing over the $3.16 billion that Wall Street forecast.
For the full year, the company has forecast EPS of $2.27 to $2.39 a share, though it had recently adjusted its forecasts moderately lower.
Last month Reynolds American agreed to a takeover by British American, the maker of Kent cigarettes, which would have the British tobacco company purchase the 57% of Reynolds it didn't already control in a $49 billion transaction.
The transaction is expected to give Reynolds' popular Newport menthol cigarette more exposure to European markets.
BAT said it expects the deal to close in the third quarter of this year, "subject to obtaining the relevant approvals."
BAT shares fell modestly at the open of trading in London to change hands at 4,992 pence each and trim the three month gain to just under 14%.