BTAFF - Unveiling British American Tobacco's Value Dilemma

2024-02-20 17:48:45 ET

Summary

• British American Tobacco is very attractive to investors due to its 9.5% dividend yield, cheapness of the stock, and perceived resilience to economic downturns.
• However, I think it might be a value trap. I have concerns about the decline of the core cigarette business, the sustainability of the dividend, and regulation struggles.
• Because of these concerns, I think the stock is likely to remain cheap for a longer time. I am rating it as a "Hold".

Introduction

British American Tobacco ( BTI ) ( BTAFF ) gets a “Strong Buy” rating from Wall Street analysts and a “Buy” rating from Seeking Alpha analysts. The number of articles published here on Seeking Alpha, their readership, and the comments mostly indicate a bullish consensus.

I totally understand why the stock is so attractive to investors right now. It offers a 9.5% dividend yield, looks incredibly cheap, and seems resilient to economic downturns. What more does an investor want?...

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