Notice: Function _load_textdomain_just_in_time was called incorrectly. Translation loading for the updraftplus domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /home/vestivxx/public_html/wp-includes/functions.php on line 6114

Notice: Function _load_textdomain_just_in_time was called incorrectly. Translation loading for the wprss domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /home/vestivxx/public_html/wp-includes/functions.php on line 6114

Notice: Function _load_textdomain_just_in_time was called incorrectly. Translation loading for the wprss domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /home/vestivxx/public_html/wp-includes/functions.php on line 6114
9% dividend yield! Should I buy this FTSE 100 dividend stock? – Vested Daily

9% dividend yield! Should I buy this FTSE 100 dividend stock?

FTSE 100 tobacco stocks have long been attractive picks for UK share investors. The addictive nature of their products meant that they could bank on resilient revenue generation year after year, whatever the weather. This, allied with their high levels of cash generation, make them generous and reliable dividend payers.

British American Tobacco (LSE: BATS) illustrated this robustness during Covid-19. While total dividends from UK shares fell 44% year-on-year, according to Link Group, this FTSE 100 stock raised the annual payout again. Dividends here have grown at a compound annual growth rate of 7% during the past 10 years.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

Pleasingly, City analysts think British American Tobacco will continue to lift shareholder payments, too. They are anticipating rewards of 218.4p and 229.4p per share in 2021 and 2022 respectively. At its current share price of £25.35 per share this means British American Tobacco’s yield sits at a whopping 8.6% for this year and 9% for 2022. Of course, all forecasts can change based on future developments and are not something to rely on. 

e-cigs to the rescue?

The critical issue when it comes to buying into Big Tobacco is not the outlook for their traditional combustible goods. The growth prospects of their next generation products is what is influencing my decision to buy or to ignore the likes of this FTSE 100 firm.

British American Tobacco has itself said that “we encourage those who would otherwise continue to smoke to switch completely to scientifically-substantiated, reduced-risk alternatives.” The company, like all the major industry players, has ploughed eye-watering sums into developing alternatives like its Vuse electronic cigarette. British American Tobacco aims to have 50m buyers of its so-called New Category products by 2030.

The introduction of e-cigarettes on the NHS came one step closer last month in a possible boost to the mass adoption of such products. However, I have huge concerns that vapour-based products may not take off as many are predicting as health worries linger.

Okay, US regulators approved British American Tobacco’s Vuse Solo product in a landmark ruling. But a raft of the company’s other next-gen products failed to attain sign-off. Fears over the impact on users’ wellbeing remain significant as scientists and lawmakers the world over pore over medical data. The prospect of biting restrictions on the sale, marketing, and usage of e-cigarettes and similar products — the same kind of rules that have decimated cigarette usage in recent decades — is a massive threat.

Why I’d buy other FTSE 100 shares

It could be argued that these risks to British American Tobacco are baked into its current share price above £25. Its forward price-to-earnings (P/E) ratio is currently below the widely-considered bargain territory of 10 times and below. It sits at just 7.8 times.

However, I’m not encouraged to invest by this low valuation. It’s worth remembering that the British American Tobacco share price has plummeted more than 40% during the past five years. This is why, as someone who invests with a long-term view, the prospects of more market-bashing dividends over the next couple of years aren’t enough to make me part with my cash. Id rather buy other big-dividend-paying stocks right now.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies still trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!


Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended British American Tobacco. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

This post was originally published on Motley Fool

Financial News

Daily News on Investing, Personal Finance, Markets, and more!