In this article, we will take a look at some of the best FTSE dividend stocks to buy now.
In recent years, investors have shown a preference for global stocks, particularly high-growth options like US technology companies, over UK equities. Over the past decade, the British index has achieved a 6% annual total return compared to 13% for the US broader market. Analysts suggest that this underperformance is partly due to weak earnings, domestic political instability, and the absence of a significant technology sector in the UK market. However, a notable factor is the sharp decline in valuations as investors have steered away from UK stocks. Goldman Sachs remarked that the challenge is not a lack of interest from foreign investors, who currently hold about two-thirds of the UK market capitalization, but rather the limited participation of domestic investors in UK equities.
That said, investing in UK stocks can still be a worthwhile choice. While the UK market lacks significant technology companies, its equities in sectors like finance, energy, and mining provide diversification opportunities that complement the tech-heavy and highly valued US markets. In addition, the UK’s index faces less risk from tariffs and trade restrictions. Goldman Sachs Research highlighted that UK equities could gain from various government measures, such as pension reforms aimed at boosting domestic investment in UK stocks and policies supporting homebuilding initiatives.
Lindsay Matcham, involved in futures sales trading at Goldman Sachs Global Banking & Markets, suggested that UK equities could appeal to investors seeking diversification. She noted that these stocks offer attractive valuations, strong dividend yields, and reduced concentration risk.
Russ Mould, investment director at AJ Bell, presented a rather interesting take on the UK market’s limited exposure to technology stocks. He pointed out that this reduced exposure has made the UK stock market less volatile compared to the US, where technology stocks are a key driver of market fluctuations. Mould observed that, despite its criticisms, the UK market experienced a relatively stable summer compared to the US, attributing this to differences in valuation and the relative expectations of the two markets.
The lower volatility in the UK market presents compelling investment opportunities, particularly given its attractive dividend yields. The FTSE 100 offers a yield of 3.68%, while the FTSE 250, representing medium-sized UK firms, provides slightly lower but still appealing income prospects. This setup allows investors to explore higher-growth sectors, such as smaller companies while benefiting from rising dividends. According to BlackRock, UK dividends are currently growing at a rate of 2-3%, aligning with long-term inflation. Stocks that consistently grow their dividends often have stable cash flows, enabling them to increase payouts over time.
Janus Henderson’s 2023 annual dividend report highlighted this upward trend, revealing that UK dividends reached approximately $86 billion in 2023, a significant rise from the $63.1 billion distributed in 2020. Given this, we will take a look at some of the best FTSE dividend stocks.
Photo by Karolina Grabowska: https://www.pexels.com/photo/hands-holding-us-dollar-bills-4968630/
Our Methodology:
For this list, we reviewed the UK CCC Dividend list, which highlights UK companies with the longest histories of dividend growth. This list is based on the structure of David Fish’s US Dividend Champions spreadsheet and serves as a useful tool to help identify and screen dividend growth stocks in the UK. From this list, we chose 10 stocks with the highest dividend yields as of December 29 and arranged them in order from lowest to highest yield. We also measured hedge fund sentiment around each stock according to Insider Monkey’s database of 900 as of Q3 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
10. Pentair plc (NYSE:PNR)
Dividend Yield as of December 29: 1.01%
Pentair plc (NYSE:PNR) is an American water treatment company based in the United States, but it is incorporated in Ireland and has its tax residency in the UK. The company is attracting increased interest from investors due to the rising demand for water solutions. The company’s business model aligns with global efforts to address environmental challenges and work towards carbon neutrality. The stock has surged by over 39% in the past 12 months.
In the third quarter of 2024, Pentair plc (NYSE:PNR) reported revenue of $993.4 million, which fell slightly by 1.5% from the same period last year. However, the revenue beat analysts’ estimates by $5.02 million. The company’s operating income for the quarter came in at $180 million, which was flat on a YoY basis. It has revised its full-year 2024 GAAP EPS forecast to around $3.70 and raised its adjusted EPS guidance to approximately $4.27.
Pentair plc (NYSE:PNR)’s cash position came in strong during Q3 2024. The company reported an operating cash flow of $249 million, up from $162 million in the prior-year period. Its free cash flow also jumped to $234 million, from $143 million in the same quarter last year. On December 17, the company declared an 8.7% hike in its quarterly dividend to $0.25 per share. Through this increase, the company stretched its dividend growth streak to 49 years, which makes it one of the best dividend stocks on our list. The stock offers a dividend yield of 1.01%, as of December 29.
The number of hedge funds tracked by Insider Monkey owning stakes in Pentair plc (NYSE:PNR) grew to 47 in Q3 2024, from 40 in the previous quarter. These stakes are worth over $1.7 billion in total. Among these hedge funds, Impax Asset Management was the company’s leading stakeholder in Q3.
9. Willis Towers Watson Public Limited Company (NASDAQ:WTW)
Dividend Yield as of December 29: 1.12%
Willis Towers Watson Public Limited Company (NASDAQ:WTW) is a London-based insurance company that offers a wide range of related services to its consumers. On December 20, Jefferies upgraded the stock to Buy from Hold. According to the firm, as the company works to close the free cash flow margin gap with its peers through structural changes and margin improvements, it is expected that the valuation gap will also decrease, resulting in a price target of $382, representing a 24% upside. In the past 12 months, the stock has delivered an over 31% return to shareholders.
In the third quarter of 2024, Willis Towers Watson Public Limited Company (NASDAQ:WTW) generated $2.29 billion in revenues, which showed a 5.7% growth from the same period last year. The revenue also surpassed analysts’ estimates by $871,000. The company’s operating income came in at $414 million, up from $351 million in the prior-year period.
Willis Towers Watson Public Limited Company (NASDAQ:WTW) demonstrated a strong cash position during the year. In the first nine months of 2024, the company reported an operating cash flow of $913 million, up from $823 million at the end of September 2023. Its free cash flow amounted to $807 million, growing from $707 million on a YoY basis. During this period, the company returned $265 million to shareholders through dividends.
On December 11, Willis Towers Watson Public Limited Company (NASDAQ:WTW) declared a quarterly dividend of $0.88 per share, having raised it by 4.8% earlier this year. This marked the company’s ninth consecutive year of dividend growth, which makes WTW one of the best FTSE dividend stocks on our list. As of December 29, the stock supports a dividend yield of 1.12%.
At the end of Q3 2023, 42 hedge funds tracked by Insider Monkey held stakes in Willis Towers Watson Public Limited Company (NASDAQ:WTW), compared with 47 in the previous quarter. These stakes have a collective value of over $2 billion.
8. Linde plc (NASDAQ:LIN)
Dividend Yield as of December 29: 1.31%
Linde plc (NASDAQ:LIN) is a global multinational chemical company that provides a wide range of gases to industries like healthcare, manufacturing, energy, food and beverage, chemicals, and electronics. Despite facing ongoing economic challenges in the third quarter, the company delivered impressive results, with a 9% increase in earnings per share (EPS), a rise in return on capital (ROC) to 25.8%, and a 130 basis point improvement in operating margins, reaching 29.6%. In addition to managing its short-term performance, the company secured its largest-ever gas sale project, boosting its project backlog to $10 billion. This milestone supports future growth in the industrial gas sector while upholding the company’s disciplined investment approach. The stock has surged by nearly 3% in the past 12 months.
In Q3 2024, Linde plc (NASDAQ:LIN)’s revenue came in at $8.4 billion, which showed a 2.46% growth from the same period last year. The revenue also surpassed analysts’ expectations by $9.33 million. The company’s operating profit amounted to $2.1 billion, with an operating profit margin of 25%. Mar Vista Investment Partners, LLC mentioned LIN in its Q3 2024 investor letter. Here is what the firm has to say:
“Linde plc (NASDAQ:LIN) is the world’s largest, global industrial gas producer. The company enjoys the highest profit margins and returns on capital in the industry. Linde’s primary products are atmospheric gases and process gases. Industrial gases have benefitted from secular growth trends in decarbonization and carbon sequestration. Moreover, the opportunity in blue and green ammonia and hydrogen are substantial. Projects in these areas are quickly being added to its backlog for future growth. We see these secular trends as long-term positives for Linde and the entire industrial gas industry.
Linde believes it can grow its volumes with new applications; the buildout of small, on-site plants using its technologies; and focusing on growing geographies such as India, Malaysia, Vietnam, China and Brazil. Despite the long-term growth opportunities, recent demand trends have slowed due to weak global industrial production and a challenging year-over-year comparable. Among the regions, the U.S. remains resilient, with volumes flat to slightly negative. Europe, Latin America, the Middle East, and China are all sending mixed to negative economic signals. We believe these slower trends are transitory in nature, providing an opportunity to purchase shares in Linde at attractive prices.”
Linde plc (NASDAQ:LIN) is a reliable dividend payer, supported by its strong cash position. In the latest quarter, it reported an operating cash flow of $2.73 billion, an 8% increase from the previous year. Its free cash flow totaled $1.66 billion. During this period, the company returned $1.3 billion to shareholders through dividends and stock repurchases. It has maintained a 31-year record of consistent dividend growth, offering a quarterly dividend of $1.39 per share. With a dividend yield of 1.31% as of December 29, LIN is one of the best FTSE dividend stocks on our list.
As of the close of Q3 2024, 63 hedge funds held stakes in Linde plc (NASDAQ:LIN), the same as in the previous quarter, according to Insider Monkey’s database. These stakes have a consolidated value of over $3.6 billion.
7. AstraZeneca PLC (NASDAQ:AZN)
Dividend Yield as of December 29: 2.24%
AstraZeneca PLC (NASDAQ:AZN) ranks seventh on our list of the best FTSE dividend stocks. The multinational pharmaceutical and biotech company specializes in a wide range of innovative medicines. The stock is popular among income investors because of its solid cash position. In the first nine months of the year, the company generated nearly $9 billion in operating cash flow, an increase from $7.9 billion during the same period last year. By the end of the quarter, it had approximately $5 billion in cash and cash equivalents. The company has consistently paid dividends to shareholders for 32 years. It currently offers an interim dividend of $1.00 per share, with a dividend yield of 2.24%, as of December 29.
Despite AstraZeneca PLC (NASDAQ:AZN)’s strong cash position providing some flexibility, its stock has fallen by more than 3% in 2024 due to various challenges. Recently, its operations in China were impacted after the company’s president in the region, Leon Wang, and several other senior executives were arrested as part of fraud investigations. As a result, AstraZeneca expects a drop in sales in China, which is one of its important international markets.
However, AstraZeneca PLC (NASDAQ:AZN) produced solid results in the third quarter of 2024 that boosted investor confidence. Revenue rose 18% year-over-year, totaling $13.6 billion. Adjusted earnings per share were $2.08, marking a 20% increase from the same period last year. The company’s oncology division, its largest, generated $5.6 billion in sales during the third quarter, a 19% increase compared to the previous year. Parnassus Investments also highlighted this in its Q2 2024 investor letter. Here is what the firm has to say:
“AstraZeneca PLC (NASDAQ:AZN) gained after announcing robust first-quarter results and setting 2030 targets at an Investor Day that were above consensus expectations. We continue to believe that AstraZeneca’s robust pipeline and industry-leading innovation in oncology should support above-expectation revenue growth for the next several years.”
AstraZeneca PLC (NASDAQ:AZN) was included in 42 hedge fund portfolios at the end of Q3 2024, compared with 49 in the previous quarter, according to Insider Monkey’s database. The stakes owned by these hedge funds are worth nearly $2 billion in total.
6. Smith & Nephew plc (NYSE:SNN)
Dividend Yield as of December 29: 3.03%
Smith & Nephew plc (NYSE:SNN) is a London-based multinational medical equipment manufacturing company that offers a wide range of services and products to its consumers. The company’s Advanced Wound Management (AWM) segment continued to lead among its various divisions, generating $422 million in revenue in Q3 2024, a 6.5% increase compared to the same period last year. Analysts highlighted the segment’s strengths, including a diverse and loyal customer base, a strong group of current buyers, and proprietary technology.
Overall, in the third quarter of 2024, Smith & Nephew plc (NYSE:SNN) posted revenue exceeding $1.4 billion, reflecting a 4% increase compared to the same quarter last year. However, the growth was not particularly reassuring for investors. The company explained that slower performance in China during the quarter had a negative impact on growth, reducing it by 190 basis points. This was due to the effects of Value-Based Pricing (VBP) on Sports, along with weaker demand and subsequent adjustments in the Recon segment. The stock has fallen by over 9% in the past year.
Despite these challenges, Smith & Nephew plc (NYSE:SNN) is progressing with its transformation into a higher-growth company. The US Recon segment, which was once a weakness, has shown growth, and the issues in China are anticipated to ease by 2025. Continued improvements in operational and commercial metrics suggest that the company’s 12-Point Plan and cultural changes are becoming integral to its operations. Heartland Advisors made the following comment about Smith & Nephew plc (NYSE:SNN) in its Q3 2024 investor letter. Here is what the firm has to say:
“Health Care. Another new holding from our quality value watchlist is Smith & Nephew plc (NYSE:SNN), a leading medical device company for advanced wound care, sports medicine, and orthopedics.
The company has been hard at work for over two years implementing a badly needed self-help playbook. Those efforts are increasingly bearing fruit. While SNN’s wound care business enjoys a strong return on invested capital, its orthopedics group is well below peers or what is deemed acceptable. Management is taking several measures to improve asset utilization and capital allocation. Fixing the orthopedic segment’s performance can unlock significant value for shareholders…” (Click here to read the full text)
Smith & Nephew plc (NYSE:SNN) is one of the best FTSE dividend stocks on our list as the company has been making regular dividend payments to shareholders since 1937. It currently pays an interim dividend of $0.144 per share and has a dividend yield of 3.03%, as of December 29.
Insider Monkey’s database of Q3 2024, 10 hedge funds tracked by Insider Monkey held stakes in Smith & Nephew plc (NYSE:SNN), up from 9 in the previous quarter. These stakes are collectively valued at over $27.4 million. Among these hedge funds, Armistice Capital owned the largest stake in the company in Q3.
5. Unilever PLC (NYSE:UL)
Dividend Yield as of December 29: 3.25%
Unilever PLC (NYSE:UL) is a British multinational consumer goods company that offers a wide range of related products. In the first half of 2024, the company experienced a 4.1% increase in sales on an underlying basis, driven by three consecutive quarters of positive volume growth. Pricing adjustments were in line with expectations, showing a gradual decrease. Improved gross margins provided the company with the ability to invest more in innovation, resulting in a significant boost to overall profitability. Its operating profit reached €6.1 billion, reflecting a 17.1% year-over-year growth.
Unilever PLC (NYSE:UL) has decided to abandon its plans to sell its €15 billion ice cream division to private equity firms and will instead focus on pursuing an independent public listing for the unit. Earlier this year, in March, the consumer goods company announced its intention to spin off its ice cream business and explore interest from private equity buyers for popular brands like Ben & Jerry’s, Magnum, and Wall’s. In the past 12 months, the stock has delivered a return of over 18.5%.
Hotchkis & Wiley Funds highlighted Unilever PLC (NYSE:UL)’s strong performance in its Q3 2024 investor letter. Here is what the firm has to say:
“Unilever PLC (NYSE:UL) is one of the world’s leading suppliers of consumer goods in the food, home care, and personal care categories, maintaining #1 or #2 market share over 75% of its business. With a new CEO and the involvement of an activist investor (Trian), Unilever is focused on execution and consistency, expecting low to mid-single digit volume-driven top line growth over the medium term, profit growth ahead of sales growth due to operating leverage and mix, and consistent return of cash to shareholders. Additionally, the company has announced plans to separate the Ice Cream business (13% of 2023 sales), which is expected to be completed by the end of 2025 and increase organic sales growth to 4-6% annually. Over the last quarter, the stock price reached a five-year high, as the company has continued to execute the plans laid out above. Unilever has not yet released their official third quarter results but has reiterated their confidence in achieving 3-5% organic sales growth for the full year, with the majority of this growth being driven by volume.”
Unilever PLC (NYSE:UL) also highlighted a strong performance in its cash segment, with free cash flow amounting to €2.2 billion during the period. By the end of the first half, the company had €4.97 billion in cash and cash equivalents, up from €4.1 billion at the close of December 2023. The company’s interim dividend comes in at £0.3696 per share for a dividend yield of 3.25%, as of December 29.
Of the 900 hedge funds tracked by Insider Monkey at the end of Q3 2024, 22 hedge funds held stakes in Unilever PLC (NYSE:UL), up from 21 in the previous quarter. These stakes have a total value of roughly $2 billion. With over 16.7 million shares, Fisher Asset Management was the company’s leading stakeholder in Q3.
4. Diageo plc (NYSE:DEO)
Dividend Yield as of December 29: 3.26%
A British multinational alcoholic beverage company, Diageo plc (NYSE:DEO) ranks fourth on our list of the best FTSE dividend stocks. The stock has dropped by nearly 13% over the past year, largely due to a challenging macroeconomic environment. Despite this, analysts remain optimistic about the company’s growth prospects. Diageo holds leading products in categories like scotch, gin, and vodka. Its large scale allows for substantial marketing investments, ensuring its brands remain prominent and difficult for competitors to displace. In addition, the company’s size provides a strategic advantage, enabling it to acquire smaller competitors and increase their value before they become significant threats.
Diageo plc (NYSE:DEO) reported positive FY24 earnings that were reassuring for investors. The company generated $20.3 billion in revenue, which represented a slight decrease of 1.4% compared to the previous year. The report also highlighted that Diageo either grew or maintained its market share in over 75% of its net sales across measured markets, including the US. Aristotle Capital Management, LLC made the following comment about DEO in its Q3 2024 investor letter:
“Headquartered in London, England, Diageo plc (NYSE:DEO) is a global leader in the alcoholic beverages industry. The company has a vast portfolio of over 200 well-recognized premium spirits (~80% of FY 2024 sales), beers (~15% and mostly Guinness) and other beverages (~5%) that are sold in nearly 180 countries. Led by its Johnnie Walker brand, Diageo is the world’s largest exporter of Scotch whiskey—its largest category at ~25% of sales—followed by other spirits such as tequila and vodka (~10% each). Diageo also owns a ~34% stake in the premium champagne and cognac maker Moët Hennessy (a subsidiary of LVMH Moët Hennessy Louis Vuitton).
The company is the product of the 1997 merger between Grand Metropolitan and Guinness and the subsequent divestiture of its food-related businesses. M&A continues to be a part of Diageo’s strategy, as regional brands often dominate local markets (which provides further opportunities for mergers and industry consolidation). Over the last decade, Diageo has also meaningfully increased its presence in the rapidly growing tequila market with the acquisitions of Don Julio and Casamigos…” (Click here to read the full text).
Diageo plc (NYSE:DEO) has been gaining momentum due to its robust cash flow. In FY24, the company generated $4.1 billion in operating cash flow and $2.6 billion in free cash flow, reflecting year-over-year increases of $0.5 billion and $0.4 billion, respectively. With this strong cash position, Diageo returned $1 billion to shareholders during the fiscal year and raised its annual dividend by 5%, bringing it to $1.0348 per share. The stock’s dividend yield comes in at 3.26%, as of December 29.
Of the 900 hedge funds tracked by Insider Monkey at the end of Q3 2024, 26 funds held stakes in Diageo plc (NYSE:DEO), compared with 31 in the previous quarter. These stakes are worth nearly $703 million in total.
3. NatWest Group plc (NYSE:NWG)
Dividend Yield as of December 29: 4.37%
NatWest Group plc (NYSE:NWG) is a London-based retail and commercial bank that offers mortgages, loans, credit cards, and related services. In the third quarter of 2024, the company reported an attributable profit of £1.17 billion and a return on tangible equity (RoTE) of 18.3%. Customer deposits, excluding central items, grew by £2.2 billion, driven by increased savings across all three business sectors. The company expects to maintain a RoTE above 15% for 2024 and projects income, excluding notable items, to reach around £14.4 billion. In addition, total income, excluding notable items, increased by £182 million (5.1%) compared to Q2 2024, primarily due to growth in lending, deposits, and margin improvement.
L1 Capital also highlighted this in its Q3 2024 investor letter. Here is what the firm has to say:
“NatWest Group plc (NYSE:NWG): NatWest is the largest commercial lender in the U.K. (20% share) and the second largest U.K. retail bank with ~13% of all mortgages. We see NatWest as best positioned in the U.K. Banking sector to benefit from improving margin trends, with topline growth supported by a rebound in U.K. housing and economic activity. Moreover, with significant buybacks owing to a strong capital position, NatWest should see ~8% EPS growth p.a. over the next three years vs. ~2% expected growth for CBA. Although CBA enjoys a more dominant market position in Australia vs. NatWest in the U.K., it appears overvalued in our view as it trades on ~24x FY25 P/E (historical highs) compared to only ~7x for NatWest.
NatWest (Long +10%) shares rallied on strong quarterly results including earnings ~28% ahead of consensus expectations and upgraded guidance driven by higher-than-expected revenues with net interest margin expanding 5bps. NatWest is the U.K.’s second largest retail bank with ~13% mortgage share and the U.K.’s largest commercial lender with ~20% share. In our view, NatWest leads the U.K. Banking sector with improving underlying operating trends, a superior mortgage margin trajectory and increasing interest rate hedge income. Importantly, management expects ongoing net interest margin expansion despite the impact of BoE rate cuts. We believe the company remains significantly undervalued, trading on an FY25 P/E multiple of only ~7x and a price to tangible book value ratio (P/TBV) of only ~1x. This is despite generating a 15% return on tangible equity and ~8% p.a. earnings growth over the next three years based on consensus expectations. We find these metrics and attributes very compelling, especially when compared to Australian banks.”
NatWest Group plc (NYSE:NWG) is delivering solid returns in 2024, surging by nearly 83% in the past 12 months. A significant portion of the company’s success in the past year is due to the unusually high interest rates, which allowed the bank to achieve exceptionally strong returns on its loans. In 2024, the bank consistently kept its net interest margin—the difference between the interest it paid and earned—above 2%.
NatWest Group plc (NYSE:NWG) is a solid dividend payer as the company expects to pay ordinary dividends amounting to approximately 40% of its attributable profit in FY24. Currently, it pays a semi-annual dividend of $0.1543 per share for a dividend yield of 4.37%, as of December 29.
As of the close of Q3 2024, 15 hedge funds tracked by Insider Monkey reported having stakes in NatWest Group plc (NYSE:NWG), up from 11 in the previous quarter. These stakes are collectively valued at over $33.8 million.
2. HSBC Holdings plc (NYSE:HSBC)
Dividend Yield as of December 29: 6.19%
HSBC Holdings plc (NYSE:HSBC) is a financial services company, based in London. The company serves millions of customers through its different businesses. HSBC’s stock has experienced a significant increase, driven by its ambitious restructuring initiatives and strong third-quarter results, which have positioned the bank for sustained growth. Through these strategic efforts, HSBC is not only optimizing its operations but also laying the groundwork for future expansion. In the past 12 months, the stock has surged by over 22%.
HSBC Holdings plc (NYSE:HSBC), although a globally diversified company, derives a significant portion of its revenue from Asia, which accounts for about half of its total earnings. The rest of its income comes from various global markets, primarily through services like commercial banking and wealth management. Recently, the company has made efforts to deepen its focus on the Asian region.
For the third quarter, HSBC Holdings plc (NYSE:HSBC) reported revenue of $17 billion, reflecting a $1.1 billion increase from the same period last year and a $0.3 billion rise from the previous quarter, indicating positive business momentum. In addition, the bank announced $4.8 billion in shareholder returns, which includes a third interim dividend of $0.10 per share and a share buyback of up to $3 billion, expected to be completed by the time of the full-year results in February. Given its steady performance in Q3 and its relatively low price-to-earnings ratio, the stock appears undervalued and poised for growth.
HSBC Holdings plc (NYSE:HSBC), one of the best FTSE dividend stocks, has been making regular dividend payments to shareholders since 1997. It declared its third interim dividend of $0.10 in October, payable to shareholders on record on December 19. The stock has a dividend yield of 6.19%, as of December 29.
HSBC Holdings plc (NYSE:HSBC) was included in 14 hedge fund portfolios at the end of Q3 2024, the same as in the previous quarter, according to Insider Monkey’s database. The stakes owned by these funds have a total value of over $98 million.
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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