1. British American Tobacco p.l.c. (NYSE:BTI)
Dividend Yield as of December 29: 8.25%
British American Tobacco p.l.c. (NYSE:BTI) is a London-based company that specializes in the manufacturing of cigarettes, tobacco, and various other nicotine products. The company has encountered significant difficulties lately, marked by a sharp 34% drop in its stock price from June 2022 to April 2024, underperforming the broader market. Although there are indications of recovery, the company is still lagging behind its historical growth path, mainly due to a large $31.5 billion write-down in 2023. This has led to concerns among investors about whether BTI presents a valuable investment opportunity or a potential risk, particularly as it transitions from traditional tobacco products to newer nicotine alternatives like vapes and pouches. However, the stock has surged by nearly 24% in the past 12 months.
In the first half of 2024, British American Tobacco p.l.c. (NYSE:BTI) experienced a 6.8% drop in cigarette sales compared to the same period in 2023, following similar declines of 5.3% in 2023 and 5.1% in 2022. This contributed to a significant fall in the company’s stock price, with its market capitalization dropping by over 40% at one point. However, like other companies in the industry, British American Tobacco has responded to the decline in sales by increasing prices, which has helped boost profits and led to a recovery in its stock. Due to nicotine’s addictive properties, smokers remain a loyal and steady customer base.
British American Tobacco p.l.c. (NYSE:BTI) is a strong dividend company which makes it an attractive option for income investors. The company expects to generate £40 billion (around $50.57 billion) in free cash flow, excluding dividends, over the next five years. Since 2018, it has increased its dividend annually, making BTI one of the best FTSE dividend stocks on our list. The company offers a quarterly dividend of $0.7431 per share and has a dividend yield of 8.25%, as of December 29.
The number of hedge funds tracked by Insider Monkey owning stakes in British American Tobacco p.l.c. (NYSE:BTI) grew to 24 in Q3 2024, from 21 in the previous quarter. These stakes have a total value of more than $1.3 billion. Rajiv Jain’s GQG Partners owned the largest stake in the company in Q3.
Overall, British American Tobacco p.l.c. (NYSE:BTI) ranks first on our list of the best FTSE dividend stocks. While we acknowledge the potential for BTI to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BTI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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