This Ultra-High Dividend Stock Is Approaching an 8% Yield: Does That Make It a Buy Right Now?
High dividend yields are a double-edged sword. On the one hand, you can get a sizable amount of cash back from these investments each year. On the other hand, a high dividend yield is indicative of business weakness, which may lead to poor stock price performance and a potential cutting of the dividend in future years.One of the few large stocks approaching a dividend yield of 8% is British American Tobacco (NYSE: BTI). The tobacco and nicotine conglomerate is dealing with sector headwinds and business missteps, but it also generates robust cash flow and trades at a cheap earnings multiple. With the stock's dividend yield approaching 8%, Wall Street is saying that the business will struggle in the coming years. If the business ends up being fine and the dividend keeps growing, investors may look back a few years from now and say this was a phenomenally cheap stock.But which is the more likely scenario? Is British American Tobacco a buy here? Or is Wall Street right about the tobacco giant?Continue reading
High dividend yields are a double-edged sword. On the one hand, you can get a sizable amount of cash back from these investments each year. On the other hand, a high dividend yield is indicative of business weakness, which may lead to poor stock price performance and a potential cutting of the dividend in future years.
One of the few large stocks approaching a dividend yield of 8% is British American Tobacco (NYSE: BTI). The tobacco and nicotine conglomerate is dealing with sector headwinds and business missteps, but it also generates robust cash flow and trades at a cheap earnings multiple. With the stock's dividend yield approaching 8%, Wall Street is saying that the business will struggle in the coming years. If the business ends up being fine and the dividend keeps growing, investors may look back a few years from now and say this was a phenomenally cheap stock.
But which is the more likely scenario? Is British American Tobacco a buy here? Or is Wall Street right about the tobacco giant?
