1 Ultra-High-Yield Dividend Stock to Buy Hand Over Fist Right Now as Trump's Tariff Storm Continues to Cast Shade on the Market

Data source: British American Tobacco. YOY = year over year. All figures in constant currency.

Does anything stick out to you? The takeaway that I gather from the trends above is that British American Tobacco experienced some outsize growth during the peak periods of the COVID-19 pandemic. Moreover, the company’s growth has decelerated significantly as pandemic fears have subsided during the past couple of years.

In a lot of ways, the volatility in the stock market right now serves as a barometer measuring how people feel about the tariff policies. However, Trump’s first 100 days in office ended with something much worse than some panic selling. According to a new report from the Bureau of Economic Analysis (BEA), U.S. real gross domestic product (GDP) decreased at an annualized rate of 0.3% during the first quarter.

I can’t say whether the U.S. is headed toward a recession. But if the trends above suggest anything, it’s that sin stocks tend to experience some new life during times of pronounced economic uncertainty.

Right now, British American Tobacco trades at a forward price-to-earnings (P/E) ratio of 9 — well below the S&P 500’s average forward P/E multiple of 20. I think this disparity suggests that investors aren’t expecting much in the way of growth for the company.

While that could be the case, consumers may turn to vices in higher volumes in the near term — bringing on some growth levels not seen since the early days of the pandemic. With that said, I would not encourage investing in British American Tobacco out of speculation that the company experiences some fleeting growth over the coming quarters. Rather, the long-run performance of an investment in the company is what matters most.

During the past five years, British American Tobacco has sported a total return of 70%. While this trails the total return of the S&P 500, I actually think the disparity is a bit misleading. The last few years in particular have been dominated by the artificial intelligence (AI) revolution, and technology stocks specifically have risen by parabolic levels — with valuations soaring by trillions in the process.

At this time, the S&P 500 is so heavily concentrated in such a small number of volatile technology stocks, the index is essentially driven by the AI trade. For this reason, I see an investment in British American Tobacco as potentially safer than the seemingly diversified S&P 500 right now.

Even though it does not carry the same prospects of a growth stock, British American Tobacco has made patient investors a lot of money — thanks in large part to dividend reinvestment. With its current dividend yield of 7%, generous long-run gains, and attractive valuation, British American Tobacco stock is hard to pass up right now.

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Adam Spatacco has no position in any of the stocks mentioned. The Motley Fool recommends British American Tobacco P.l.c. and recommends the following options: long January 2026 $40 calls on British American Tobacco and short January 2026 $40 puts on British American Tobacco. The Motley Fool has a disclosure policy.

1 Ultra-High-Yield Dividend Stock to Buy Hand Over Fist Right Now as Trump’s Tariff Storm Continues to Cast Shade on the Market was originally published by The Motley Fool