British American Tobacco plc (BATS): Is It an Exciting Emerging Market Play?

So is British American Tobacco a buy?
Broker Investec expects earnings per share to gallop 11% higher in 2013 to 231 pence, before staging a further 10% advance next year to 255 pence. British American Tobacco plc (LON:BATS) currently trades on a P/E rating of 15.5 and 14.1 for this year and next, trading at a premium to a forward earnings multiple of 13.2 for the whole tobacco sector.

However, the company has built dividends steadily in recent years, and hiked 2012’s full-year payment 7% to 134.9 pence. And Investec expects this to accelerate to 151.3 pence and 166.8 pence this year and next, providing yields of 4.2% and 4.7%. This compares with an average forward yield of 3.3% for the FTSE 100.

I believe that exciting earnings prospects, underpinned by rising developing market revenues that should maintain an ultra-progressive attractive dividend policy, makes British American Tobacco plc (LON:BATS) a solid stock market pick.

The article Is British American Tobacco an Exciting Emerging Market Play? originally appeared on Fool.com and is written by Royston Wild.

Fool contributor Royston Wild has no position in any stocks mentioned, and neither does The Motley Fool.

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