BTAFF - British American Tobacco: A Solid 10% Yield For Retirees

2024-05-05 23:46:48 ET

Summary

• British American Tobacco's alternative products are experiencing impressive growth, indicating potential for revenue and profit upside going forward.
• The company's non-combustible categories, such as Vuse and Velo, are driving significant earnings growth and are now contributing to profitability.
• British American Tobacco's declining traditional tobacco segment highlights the importance of new category investments.
• Shares are exceptionally cheap and offer a 10% dividend as well as upside.

British American Tobacco ( BTI ) (BTAFF), together with the larger tobacco sector, has fallen into a major consolidation in the last year, creating an engagement opportunity for investors with a long-term investment horizon. British American Tobacco’s alternative products categories, Vuse especially, is seeing impressive growth, indicating that the company has considerable revenue and gross profit growth potential here. Additionally, the company's new categories achieved profit status in FY 2023. With shares trading at a 6.0X P/E ratio, implying a 17% earnings yield, I believe BTI makes a very solid value proposition for dividend investors!...

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