Love ’em or hate ’em, there’s no denying tobacco stocks are among the best and most reliable dividend payers in the investing world. Indeed, the yields on these stocks might be as addictive as the tobacco products that made such high payouts possible in the first place.

Take a look at the dividends available from today’s best-known tobacco stocks:

#-ad_banner-#While these are among the industry’s most recognizable names, there’s another great tobacco stock I suspect many U.S. investors have forgotten about, perhaps because the underlying company operates mainly overseas. The stock currently trades around $110 and offers a dividend of $4.70 a share — good for a 4.3% yield that’s right in there with big names I mentioned.

Most investors will recognize the firm’s top brands, such as Kent, Pall Mall, Dunhill, Newport, and Kool. These may not be in the same league as Marlboro, the world’s #1 cigarette brand by far, but they’ve been strong enough to lead the company to more than $25 billion in annual sales.

Granted, Philip Morris (NYSE: PM), the company that makes Marlboro, was pulling in more than $25 billion a decade ago and now generates annual revenue north of $80 billion. But the company I’m thinking of — London-based British American Tobacco (NYSE: BTI) — has made the most of its sales and has even provided better shareholder returns despite more pronounced economic weakness in Western Europe, which accounts for a quarter of its revenue.

During the past five years, BTI posted total returns averaging 22.8% a year, a full point higher than PM’s 21.8% rate of return. Dividend growth has been excellent during that time, too, averaging nearly 15% a year. This compares well with competitors’ dividend growth rates, which have ranged from about 2% for Altria (NYSE: MO) to 29% for Lorillard (NYSE: LO).

Of course, as for any tobacco company, growing sales will continue to be a tall order because of extensive industry regulations and excise taxes. However, total revenue growth of at least 5% to 6% a year is feasible for BTI going forward. The firm posted a 4% overall increase in 2013 after adjustment for currency fluctuations, even though Western Europe dragged down results with its meager 1% year-over-year increase. But if BTI could perform at that level with Europe slumping, I’m certain it can pick up the pace significantly now that region is finally recovering.

However, the main factor in future sales growth will likely be a large presence in presence in Latin America, the Middle East and Asia, which currently generate three-quarters of BTI’s total revenue. Since these and other emerging markets are responsible for approximately 80% of world cigarette demand and tobacco use is increasing among the rising middle class in these regions, BTI is clearly in a perfect position to capitalize.

Although the company has several hundred cigarette brands, the premium varieties are likely to take center stage in emerging markets because consumers there are switching to pricier offerings as they become more successful. In the first quarter, for instance, Dunhill sales rose 5% on greater demand in Indonesia, South Korea, and the Middle East. Pall Mall revenue jumped 9% because of the brand’s popularity in areas like Chile and Pakistan. Sales advanced nearly 7% for the Asia-Pacific region overall.

BTI owns 42% of Reynolds American (NYSE: RAI) and 31% of the large Indian conglomerate ITC, so it has solid exposure to the U.S. and Indian tobacco markets, too. India is especially promising since tobacco use there has been increasing for years and the number of smokers now totals 110 million, compared with 75 million three decades ago.

Interestingly, there has been speculation about BTI acquiring the remaining 58% of Reynolds American soon, since a 10-year “standstill” agreement is set to expire in July, freeing up BTI to increase its ownership. The buyout could cost BTI roughly $16 billion, but Citigroup analysts estimate it would boost the company’s earnings per share (EPS) by 10% to 13%, as well as further diversify its global footprint. 

A Reynolds buyout would also give BTI one of the world’s best electronic cigarette platforms. BTI recently introduced its own e-cigarette (Vype), and it plans to roll out a second brand next year.

Still, the overall tobacco industry faces serious headwinds — the regulations and taxes I mentioned, as well as eroding sales in North America and Europe as people try to quit smoking — so tobacco companies may not be able to raise their dividends as quickly as before. This includes BTI, though the firm should be able to increase its payout by at least 6% to 8% a year going forward, thanks to its strong pricing power, solid operating margins, and focus on emerging markets.

Risks to Consider: Besides taxes, regulations, and falling demand in some regions, BTI (and the rest of the tobacco industry) may continue to face lawsuits by smokers seeking massive compensation for tobacco-related health issues.

Action to Take –> Despite the risks and headwinds, BTI is a top-notch income stock to buy in the tobacco space, offering reliable dividends, global diversification, and lower volatility than the broader market. With $2.5 billion in cash on its balance sheet and $3.7 billion of annual free cash flow, BTI is safe bet to remain a great dividend payer with yields north of 4%. The stock looks fairly valued based on a trailing price-to-earnings ratio of 17 — but it’s attractively priced on a forward basis, trading for 14 times next year’s projected earnings of $7.66 a share.

P.S. As BTI shows, the fact that a company isn’t based in the U.S. doesn’t make it a risky growth stock. In fact, if you’re ignoring overseas markets, then you could be missing out on some of the market’s biggest income opportunities. All told, we’ve found 93 companies paying 12%-plus yields — and nearly a thousand more paying above 6%. That’s why we’ve created a special report that tells you everything you need to know about international high-yielders — including names and ticker symbols of some of our favorites. Click here to learn more.