With Shares Trading Down 55%, Is Now the Time to Buy This High-Yield Tobacco Stock?

Core Viewpoint - British American Tobacco is facing significant challenges due to a declining cigarette market, but it is developing a new division that shows promise for future growth [1][5]. Group 1: Market Performance - The share prices of British American Tobacco have decreased by approximately 55% since their peak in 2017 [1]. - The company's dividend yield has reached a high of 9.4%, attracting dividend investors [1]. Group 2: Declining Cigarette Business - British American Tobacco is one of the largest cigarette manufacturers globally, but cigarette volumes have been declining for years [2]. - The production of cigarettes dropped from 700 billion in 2018 to 555 billion in 2023, representing a 21% decline over five years [3]. - The company has revised its accounting for U.S. brands, now assuming they will become worthless in about 30 years, indicating a terminal decline in the U.S. cigarette business [4]. Group 3: Strategic Adjustments - Despite the decline in volume, British American Tobacco has managed to implement price increases to mitigate the impact, allowing it to maintain its dividend [6]. - The company is actively pursuing alternative tobacco and nicotine products, which currently contribute around 16.5% to its revenue, with a goal of increasing this to 50% by 2035 [7]. Group 4: New Categories Division - The "new categories" division of British American Tobacco became profitable at the division level in 2023, two years ahead of management's expectations [8]. - The success of this division is not merely speculative; it is demonstrating tangible results [8]. Group 5: Investment Considerations - For aggressive investors, the steep decline in stock price and high yield may present an attractive opportunity, provided they are willing to accept the associated risks [9][10].