BTI remains undervalued, offering a secure 6% dividend yield, with recent US market improvements enhancing long-term dividend sustainability. Key positives include US growth, resolution of the Canada settlement, and Velo Plus gaining share, though illicit vape challenges persist. Transformation is slower than peers, but BTI's diversified, multi-category approach and strong cash flow support continued dividend payments and deleveraging.
British American Tobacco has re-rated materially from a sub 6X P/E to a current P/E of 10X. Returns based on management guidance look relatively unexciting, but there's more to the story. Turning the tide on illicit disposables in the U.S. and exciting prospects for Modern Oral could provide multi-year tailwinds for growth, boosting earnings above management guidance.
These four dividend stocks are trading below $50 and have a yield higher than 4%.
British American Tobacco (BTI) has been upgraded to a Zacks Rank #2 (Buy), reflecting growing optimism about the company's earnings prospects. This might drive the stock higher in the near term.
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
With the price upside for 2025 projected for BAT exhausted now since the time I last checked on it, another look at it was warranted. The company's just released trading update adds further insight into this update, especially as it includes a revenue outlook upgrade. Updated estimates reveal that the stock is in a strong position compared with peers in terms of market valuations, and its dividend yield continues to add to its appeal.
BTI is navigating headwinds in combustibles and vaping, but gains in oral products and New Categories support modest revenue growth forecasts for 2025. The company's strong free cash flow, safe dividend, and ongoing ITC stake monetization bolster the balance sheet and support shareholder returns. Valuation remains attractive at 7.2x EBITDA, offering significant upside potential if growth improves, especially compared to peers like Altria and Philip Morris.
British American Tobacco p.l.c. (NYSE:BTI ) Q1 2025 Sales/Trading Statement Call June 3, 2025 3:30 AM ET Company Participants Victoria Buxton - Group Head, IR Tadeu Marroco - Chief Executive Soraya Benchikh - CFO Conference Call Participants James Edwardes-Jones - RBC Gaurav Jain - Barclays Faham Baig - UBS Rey Wium - Anchor Stockbrokers Philip Spain - JP Morgan Bastien Agaud - Bank of America Rashad Kawan - Morgan Stanley Simon Hales - Citi Victoria Buxton Good morning, everyone.
The FTSE 100 company expects the U.S. to return to revenue and profit growth, driven by strengthening delivery in the combustibles category and the performance of its Velo Plus product.
Ongoing trade and macroeconomic uncertainties could create earnings headwinds for British American Tobacco and Philip Morris. The more uncertain the times are, the more I learned to emphasize return drivers that are lest subject to ambiguity. Dividend payouts are a much more accurate metric for PM and BTI's true economic earnings.
Despite market volatility and macro headwinds, my Dividend Harvesting Portfolio continues to deliver strong, growing income and steady capital appreciation. I remain focused on building a diversified, income-producing portfolio, reinvesting all dividends, and maintaining strict sector and position limits to mitigate downside risk. Recent additions to JEPI, OBDC, and BP reflect my conviction in high-yield opportunities and my belief in energy and financials for the second half of 2025.
British American Tobacco sold the shareholding in Indian conglomerate ITC for more than initially planned.