FTSE 100 stalwart British American Tobacco (LSE: BATS) isn’t everyone’s cup of tea. That is for causes which may be apparent to some, however I’ll make them clear shortly anyway.

Nevertheless, in terms of investing, I’m within the enterprise of constructing wealth, and never essentially following the group.

Right here’s why I’d be prepared to purchase some British American Tobacco shares as quickly as I’ve some investable funds.

Well being consciousness

It appears the world has awoken from a slumber lately and realised smoking is unhealthy to your well being. What a shock that’s! Anyway, whenever you couple that with the rise of ESG investing, tobacco companies like British American are actually being shunned by many.

The world’s governments are main the cost to attempt to dissuade individuals from smoking, and are pushing exhausting. There are additionally fixed threats of regulation modifications that might ban the buying of sure tobacco merchandise.

Each of those points are ongoing dangers that might dent British American’s earnings and returns, and one thing I’ll regulate.

With the altering shift in sentiment lately, it’s no surprise the shares have struggled. For context, British American shares are down simply 5% over a 12-month interval from 2,603p presently final 12 months, to present ranges of two,457p. Not unhealthy, proper? Effectively, wanting again additional, they’re down 55% over a seven 12 months interval from 5,530p, to present ranges.

Dividend king!

With my aim of constructing wealth, it’s exhausting to disregard the passive revenue alternative that British American Tobacco gives, in addition to its previous monitor document. Though I perceive that previous efficiency will not be an indicator of the long run, the enterprise has raised its dividend for years now. I can’t see that slowing anytime quickly.

At current, the shares provide a dividend yield of 9.4%. For context, the FTSE 100 common is 3.8%. Nevertheless, I do perceive that dividends are by no means assured. Plus, the shares commerce on a rock-bottom valuation, with a price-to-earnings ratio of simply six.

With low value, excessive costs, and such robust model energy, in addition to humongous attain, it’s not exhausting to know why the tobacco big has been a dividend-seekers’ favorite previously. It nonetheless is to many at current as effectively.

However what about the specter of elevated regulation? Effectively, for my part, such regulation may take a very long time to come back to fruition. By this, I imply the kind of timescale that might enable me to bag loads of dividends. We’re speaking years, if not many years.

Moreover, British American is realising the necessity to pivot its method because of the menace of bans. Its various tobacco merchandise appear to be flying off the shelf. This new income stream may proceed to help earnings and beneficiant returns too.

To summarise, the basics and passive revenue alternative, look engaging. The threats are credible, however the alternative to construct wealth by way of dividends is just too enticing to overlook out to me.