Can British American Tobacco's Non-Cigarette Ventures Sustain Its 7% Dividend Yield?
When most investors take a glance at British American Tobacco's (NYSE: BTI) financials, the first thing they probably notice is the stock's huge 7.3% dividend yield. That yield is far higher than the 1.2% being offered by the average S&P 500 stock today, and it's a huge draw if you are trying to live off the income your portfolio generates. However, investors considering this stock need to factor in that this yield might not be sustainable over the long term if British American Tobacco can't adjust to the changes taking shape in the tobacco and nicotine industry.As the company's name suggests, British American Tobacco makes tobacco products. To put some numbers on that, revenue from combustible products accounts for around 80% of the company's top line. Cigarettes account for 97% of the volume of the combustible products it sells. So cigarettes make up around 80% of the company's business.Image source: Getty Images.Continue reading
When most investors take a glance at British American Tobacco's (NYSE: BTI) financials, the first thing they probably notice is the stock's huge 7.3% dividend yield. That yield is far higher than the 1.2% being offered by the average S&P 500 stock today, and it's a huge draw if you are trying to live off the income your portfolio generates. However, investors considering this stock need to factor in that this yield might not be sustainable over the long term if British American Tobacco can't adjust to the changes taking shape in the tobacco and nicotine industry.
As the company's name suggests, British American Tobacco makes tobacco products. To put some numbers on that, revenue from combustible products accounts for around 80% of the company's top line. Cigarettes account for 97% of the volume of the combustible products it sells. So cigarettes make up around 80% of the company's business.
Image source: Getty Images.
