British American Tobacco PLC BTI stock is turning heads on Wall Street with a classic bullish signal approaching: the Golden Cross.
British American Tobacco sells the Velo nicotine pouch, a competitor to Zyn. British American Tobacco will also benefit from a federal crackdown on illegal vaping products.
On a YTD basis, BTI has underperformed Altria and Philip Morris by double-digit total returns. Most of the reasons why BTI's share price has remained depressed are temporary. If we zoom into the details, we will understand that BTI is still set to deliver positive organic growth this year.
High-yield dividend stocks always present a difficult framework for investors. Here's the reality.
BTI's share price remains low due to concerns over traditional cigarette business, but new generation products show strong growth potential. Revenue growth is expected to be low due to declining cigarette volumes, but profitability may increase through cost efficiencies and new products. Regulatory risks exist, but effective enforcement could benefit BTI by increasing market share and profit margins.
British American Tobacco should benefit from law enforcement crackdowns on illegal vaping devices. The company owns one of the leading vaping brands, as well as nicotine pouches.
British American Tobacco is one of the world's largest cigarette makers. Cigarette volumes have been in steady decline for years.
After a brief pause in which British American Tobacco performed largely in-line with the S&P500, I believe the stock is due to lag behind again. In the H1 FY24 Pre-Close update, management attributed a host of macroeconomic variables to explain weaker than expected performance in the largest segment of US Combustibles. I think these explanations distract and fail to focus on the root drivers; a secular decline due to changing consumer habits and loss of market share within the sector.
The decline in cigarette smoking has forced tobacco companies to focus on different product categories. Altria has steadily boosted the prices of cigarettes to offset its falling sales volume.
24/7 Wall Street Insight: The S&P 500 dividend yield is only about 2%.
Tobacco stocks have long been regarded as great options for dividend investors. Philip Morris is delivering strong growth, and its smoke-free products have become a sizable business.
British American Tobacco offers a high dividend yield of 9.5% and is navigating industry challenges with its strategic pivot to next-generation products. Simon Property Group is demonstrating sturdy Portfolio NOI and Base Rent growth, reflecting resilience and growth in the retail sector. Both BTI and SPG present opportunities for income-focused investors seeking reliable dividends and potential value appreciation at their current discounted prices.