LONDON -- The last five years have been tough for those in retirement. Portfolio valuations have been hammered, and annuity rates have plunged. There's no sign that matters will improve anytime soon, either, as the eurozone and the U.K. economy look set to muddle through at best for some years to come.

A great way to protect yourself from the downturn, however, is to build your retirement fund with shares of large, well-run companies that should grow their earnings steadily over the coming decades. Over time, such investments ought to result in rising dividends and inflation-beating capital growth.

In this series, I'm tracking down the U.K. large caps that have the potential to beat the FTSE 100 over the long term and support a lower-risk, income-generating retirement fund. (You can see the companies I've covered so far on this page.)

Today I'll take a look at British American Tobacco (LSE: BATS.L) , the world's second-largest tobacco company and a favored share among dividend investors (including Neil Woodford), thanks to its high profits and its policy of paying out 65% of earnings as dividends.

Smoking performance?The addictive nature of their products makes tobacco companies good defensive shares; they perform well in a downturn. BAT has proved the truth of this by comprehensively outperforming the FTSE 100 over the last 10 years:

2007

2008

2009

2010

2011

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Is BAT the Ultimate Retirement Share?