BTAFF - 10% Yielding British American Tobacco Is Delivering Stealth 18% Annual Returns

2024-05-14 07:00:00 ET

Summary

• Despite being in a seven-year bear market, BTI has shown resilience, delivering nearly 18% annual returns since December. But the 10% yield hides these.
• BTI's fundamentals, including sales, earnings, and cash flow, have been steadily growing despite the seven-year bear market. This results in the best valuation and highest yield in 25 years.
• BTI expects to be 50% RRP globally by 2035. Rating agencies, the bond market, management, and analysts are confident in these plans.
• S&P rates BTI in the top 80 companies in the world in terms of risk management and 93% optimal risk management on over 1,000 metrics.
• My family fund is 6% BTI, it's my third-largest position, and I'm more confident than ever that buying BTI today is like buying 16% yielding 30-year US Treasuries in 1981, the high-yield buying opportunity of a lifetime.

British American (BTI) (BTAFF) isn't reporting earnings until late July. However, I wanted to update my readers and members on my third-largest position in my family fund.

I wanted to clarify two things in particular. First, British American is often an "unsung hero" even in bear markets, of which it has had many.

Second, as counterintuitive as it sounds, the slow pace of price recovery is a wonderful thing for which smart long-term investors should be rooting for.

Even Dividend Aristocrats Have Bear Markets (BTI Becomes A Foreign Aristocrat This Year) ...

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