SWMAY - British American Tobacco: H2 Update Confirmed Stability And Capital Returns; 7.8% Dividend Yield
- British American Tobacco stock rose 7% last week, driven by a reassuring update on H2 trading. The Dividend Yield is still 7.8%.
- 2021 outlook was reaffirmed, including a 5%+ revenue growth and a mid-single-digit EPS growth (excluding a 7% currency headwind).
- Management still expects leverage to fall to "around 3x" at year-end, and explicitly referenced the possibility of buybacks resuming in 2022.
- The cigarette business has remained strong; New Category businesses are losing less money, but otherwise progress has been mixed.
- With shares at 2,759.0p, we expect a total return of 64% (19.6% annualized) by 2024 year-end, in just under 3 years. Buy.
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British American Tobacco: H2 Update Confirmed Stability And Capital Returns; 7.8% Dividend Yield