It's been one month since President Donald Trump's "Liberation Day" announcement, which featured a wave of tariff policies targeting just about every country around the world. During this time period, the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average each plummeted by as much as 11%.

Although the capital markets have bounced back a bit, the future state of the economy very much remains a question mark. At the moment, growth stocks have lost their appeal and investors are seeking safer, more reliable alternatives.

Let's explore why British American Tobacco (BTI 1.34%) looks like such a tempting buy right now as the tariff storm continues.

The tobacco industry is going through a rough patch, but...

For decades, the tobacco industry was shaped by a singular product: cigarettes. But during the past several years, many tobacco companies have branched out beyond traditional smoking products -- now focusing on vaping (e-cigarettes) and oral nicotine pouches.

The primary driver behind this transition is that cigarettes have long been falling out of favor with consumers. According to data compiled by the Centers for Disease Control and Prevention (CDC), sales of cigarettes in the U.S. declined by 27% between 2015 and 2021.

While British American Tobacco has explored the oral nicotine and vaping markets, the majority of its business still stems from selling cigarettes. In 2024, the company generated 27.1 billion pounds ($36 billion) in revenue. This was essentially a little changed performance compared to 2023. Of this total, 21.7 billion came from combustible products while the remaining 5.4 billion came from smokeless tobacco and other categories.

Considering British American Tobacco largely relies on cigarette sales and the fact that these rates have been in decline in a major market such as the U.S. for many years now, you may see an investment in the company as a hard pass. However, right now might be a unique time to consider investing in the tobacco giant.

Image source: Getty Images.

...now could be a time to consider investing in it

The table below illustrates revenue growth trends for British American Tobacco over the last several years.

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.

Dividend income is hard to pass up right now

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.

BTI Total Return Level data by YCharts

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.