On January 31, 2025, Wells Fargo reaffirmed its "Equal-Weight" rating for British American Tobacco (NYSE:BTI), suggesting investors hold the stock. At the time, BTI's stock price was $39.70. British American Tobacco, a major player in the consumer staples sector, is known for its diverse product range, including combustibles, oral products, heated tobacco, and vapes.
Despite the market's high valuation, BTI stands out due to its stable growth and reasonable valuation, as highlighted by Seeking Alpha. The company aims to transition to a fully smokeless portfolio by 2035, focusing on non-combustible nicotine products. This strategic shift is designed to sustain its financial performance amidst declining traditional smoking rates.
BTI offers an attractive 8% dividend yield, supported by a conservative payout ratio of 60%. This ensures stable and growing dividends, appealing to income-focused investors. Despite a 12% stock price decline over five years, BTI's dividends have consistently outpaced inflation, providing reliable returns.
The company is also enhancing shareholder value through strategic debt reduction and share buybacks. These initiatives are expected to drive annual earnings per share (EPS) growth of 6-7%. However, BTI's stock performance has lagged behind the broader market and its peers over the past decade, raising questions about its long-term prospects.
Currently, BTI's stock is priced at $39.80, showing a slight increase of 0.29%. The stock has fluctuated between $39.55 and $39.835 today, with the latter marking its highest price in the past year. With a market capitalization of approximately $87.6 billion and a trading volume of 1,064,857 shares, BTI remains a significant player in the market.
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