The U.S. market for cigarettes has shrunk and is expected to continue to decline, Dow Jones reported March 25.

In fact, the rate of decline in the cigarette market could accelerate, meaning bad news for Big Tobacco, analysts say. Philip Morris parent Altria, for example, expects the market to decline up to 3 percent annually over the next few years.

"We have highlighted accelerated volume declines as one of the bigger risks the industry faces," said Janice Hofferber, a vice president at Moody's Investors Service. Hofferber said that in the past, tobacco firms have raised prices to make up for sales declines, but "there is a limit to the pricing flexibility these companies have."

The market trend is attributed to higher tobacco taxes, bans on public smoking, and greater awareness of the health risks of smoking.

Big Tobacco firms have been trying to increase their share of the smokeless-tobacco market, but cigarettes still account for more than 90 percent of U.S. tobacco sales.

Still, industry experts say that tobacco stocks remain a good investment, in part because they have won some important legal victories in recent years. "Tobacco in general offers earnings stability and dividend security that are vital in uncertain times like we are experiencing right now," said Charles Norton, portfolio manager of the Vice Fund, which owns tobacco industry shares.