10 Best FTSE Dividend Stocks To Buy Now

7. British American Tobacco p.l.c. (NYSE:BTI)

Number of Hedge Fund Holders: 19

British American Tobacco p.l.c. (NYSE:BTI) is a British multinational manufacturing company that specializes in tobacco, cigarettes, and other nicotine products. Investing in tobacco stocks has always benefitted income investors as these companies typically enjoy substantial profit margins, possess resilient business models, and demand minimal capital expenditures. In addition, these companies don’t have to bear excess research and development expenses, which allows them to distribute a significant portion of their earnings to investors.

British American Tobacco p.l.c. (NYSE:BTI) is mainly recognized for its iconic cigarette brands, which were acquired during its merger with RJ Reynolds in 2017. Recently, the company recorded a $31 billion write-down on the worth of its US cigarette business, indicating a probable overvaluation of the acquisition. This reflects its focus on shifting towards smoke-free products. Introducing ‘reduced risk products’ could be a winning ticket for the company given declining smoking rates in the country and strict regulations. In FY23, the company reported a 1.3% year-over-year decline in revenue at £27.28 billion ($34.49 billion).

British American Tobacco p.l.c. (NYSE:BTI)’s dividend is solid, mainly driven by its stable cash generation. In 2023, the company’s operating cash flow came in at £10.7 billion ($13.53 billion) and its free cash flow before dividend payments was over £8.3 billion ($10.49 billion). It also returned over £5 billion ($6.32 billion) to shareholders through dividends. In addition, the company’s dividend outlook appears promising as it expects to generate over £40 billion ($50.57 billion) in free cash flow before dividends over the next five years. It currently offers a quarterly dividend of $0.7431 per share, which gives its stock a yield of around 12%.

British American Tobacco p.l.c. (NYSE:BTI) has a forward P/E of 7.07, while its competitor Philip Morris International has a significantly higher forward P/E of 16.72. In addition to being more attractively valued, BTI also has a dividend yield twice as high as Philip Moris’, which makes it a good dividend option for income investors.

According to Insider Monkey’s database, there are 19 hedge funds bullish on British American Tobacco p.l.c. (NYSE:BTI) as of the end of March, down from 22 in the preceding quarter. The collective value of these stakes is over $588 million. With over 12.6 million shares, Orbis Investment Management was the company’s leading stakeholder in the first quarter.