I’m always on the hunt for the best share to buy, and sometimes I start by asking which FTSE 100 stock did worst last month, and which did best.

Normally, I’d be drawn to the laggard. As a long-term value investor, that’s often where the bargains lie. But July’s worst performer was advertising group WPP, down 20%, and frankly, I wouldn’t touch it today. Artificial intelligence is eating its lunch.

So I turned to the winner instead and was surprised to see it was British American Tobacco (LSE: BATS), up 15%. That’s not a blip either. The share price is up 45% over the past 12 months. It’s been playing catch-up, as five-year growth still only totals 50%. But long-term shareholders won’t mind. They’ve been collecting juicy dividends all the way.

Strong income record

British American Tobacco has increased its shareholder payouts every year for more than four decades. Over the last 15 years, the dividend has grown at an average annual compound rate of 5.08%. That’s a powerful example of compounding.

Dividend growth has slowed lately, with 2% hikes in both 2024 and 2025. After a strong run, the trailing yield has dipped to 5.8%. I remember when it was closer to 7% or even 8%. That’s the price of share price success, I suppose.

Management has sweetened the pot by ramping up share buybacks, partly funded by offloading chunks of its stake in Indian giant ITC. It’s now targeting £1.1bn this year, up from £900m

Numbers hold up

Half-year results published this morning (31 July) showed the business holding its ground. Revenue dipped 1.7% on a reported basis to £13.47bn, while adjusted operating profit slipped 4.2% to £5.89bn. That was largely down to currency pressures and cigarette volume declines, including a 9.1% global drop.

Constant currency figures were stronger. Revenue was up 2.6%, and new category sales, covering vapour and modern oral products, rose 10.4%. Management now expects that arm to break even in 2025, a year earlier than planned. It stuck to its guidance for mid-single-digit profit growth.

The share price climbed a solid 1.81% on the day. Investors clearly remain content with the direction of travel.

Valuation looks fair

Despite its gains, the stock still trades on a price-to-earnings ratio of 10.95. Of course, tobacco stocks carry regulatory risks. Their products are harmful, and demand could fall further if smoking declines in emerging markets. Stick sales are falling sharply both in the US and South Asia.

But with the shift to smokeless products picking up pace, there may still be a viable growth story here.

I don’t know whether British American Tobacco is the very best share to buy in August. As a contrarian, I prefer to buy stocks that are due a good run, rather than those that have just had had one.

What I do know is that it’s rarely a bad time to consider buying this cigarette giant, with a long-term view. I don’t personally buy tobacco stocks, but somtimes I’m tempted to take a long and potentially lucrative puff.