BAT(BTI) The Motley Fool·2024-11-03 10:56Core Viewpoint - Investors are overly focused on rhetoric rather than actual results, with British American Tobacco (BTI) presenting a strong dividend stock opportunity with an 8.8% forward-looking yield [1][2]. Company Overview - British American Tobacco is a London-based company owning several cigarette brands, including Kent, Lucky Strike, and Pall Mall, and has expanded its portfolio with U.S. brands like Newport and Camel through its acquisition of Reynolds in 2017 [3]. - The company also offers non-combustible tobacco products, including heated tobacco options and the vaping platform Vuse [3]. Industry Trends - The global smoking-cessation movement has seen a reduction in smoking rates, with approximately one-third of the world smoking in 2000, down to about one-fifth today [4]. - Despite the decline in smoking rates, the World Health Organization estimates there are still around 1.25 billion regular smokers globally, only slightly down from 1.36 billion in 2000 [7]. Company Strategy - British American Tobacco aims to transition to a predominantly smokeless business by 2035, focusing on vaping and non-combustible products to offset declines in cigarette sales [5]. - The company has maintained stable organic revenue, with the first half of the year showing revenue levels consistent with the previous year, primarily driven by traditional cigarette sales [8]. Financial Performance - British American Tobacco has a strong track record of paying and increasing dividends, with consistent stock buybacks contributing to growing per-share profits [10]. - The current dividend is £0.743 per share, with shares outstanding at 2.212 billion [11]. Investment Considerations - While there are risks associated with regulatory scrutiny of tobacco products, the company’s reliable dividend and strong yield make it an attractive investment opportunity [12][14]. - The stock's price halving since its 2017 peak presents a potential buying opportunity for investors seeking immediate income [14].