A comprehensive analysis of the company's dividend history, yield, growth, and its sustainability
British American Tobacco PLC (BTI, Financial) recently announced a dividend of $0.7 per share, payable on 2023-11-08, with the ex-dividend date set for 2023-09-28. As investors anticipate this forthcoming payment, it's crucial to shed light on the company's dividend history, yield, and growth rates. Using GuruFocus data, let's delve into British American Tobacco PLC's dividend performance and evaluate its sustainability.
Introducing British American Tobacco PLC
After acquiring Reynolds American, British American Tobacco PLC is vying with Philip Morris International to be the largest listed global tobacco company. It's slightly larger than PMI based on net revenue, but slightly smaller in terms of total tobacco volume. The company's Global Drive Brands include Dunhill, Kent, Pall Mall, Lucky Strike, and Rothmans, along with Newport and Camel in the U.S. The company also sells vapor e-cigarettes, primarily its Vuse brand, heated tobacco under the Glo brand, and Velo modern oral tobacco products. Additionally, it holds a 29% stake in ITC Limited, the leading Indian cigarette-maker.
Exploring British American Tobacco PLC's Dividend History
Since 1984, British American Tobacco PLC has upheld a consistent dividend payment record, currently distributing dividends on a quarterly basis. The chart below illustrates annual Dividends Per Share for tracking historical trends.
Understanding British American Tobacco PLC's Dividend Yield and Growth
Currently, British American Tobacco PLC has a 12-month trailing dividend yield of 8.64% and a 12-month forward dividend yield of 8.87%, indicating an expected increase in dividend payments over the next 12 months.
With a dividend yield of 8.64%, near a 10-year high, British American Tobacco PLC outperforms 87.88% of global competitors in the Tobacco Products industry. This suggests that the company's dividend yield is an attractive proposition for income investors.
Over the past three years, the company's annual dividend growth rate was 2.40%. When extended to a five-year horizon, this rate decreased to 0.90% per year. Over the past decade, the annual dividends per share growth rate is 5.90%. As of today, the 5-year yield on cost of British American Tobacco PLC stock is approximately 9.04%.
Evaluating Dividend Sustainability: Payout Ratio and Profitability
The dividend payout ratio is a key metric to assess the sustainability of the dividend. As of 2023-06-30, British American Tobacco PLC's dividend payout ratio is 0.44, suggesting that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns.
British American Tobacco PLC's profitability rank is 8 out of 10 as of 2023-06-30, indicating good profitability prospects. The company has reported positive net income each year over the past decade, further solidifying its high profitability.
Assessing Growth Metrics for Future Prospects
British American Tobacco PLC's growth rank of 8 out of 10 suggests a good growth trajectory relative to its competitors. The company's revenue per share and 3-year revenue growth rate of 2.60% per year indicates a strong revenue model, albeit underperforming approximately 73.81% of global competitors.
The company's 3-year EPS growth rate of 5.40% per year showcases its ability to grow earnings, a critical component for sustaining dividends in the long run. However, this rate underperforms approximately 60% of global competitors. Moreover, the company's 5-year EBITDA growth rate of -22.00% underperforms approximately 96.77% of global competitors.
Wrapping Up
In conclusion, British American Tobacco PLC's consistent dividend payments, notable dividend growth rate, and reasonable payout ratio demonstrate its commitment to rewarding shareholders. Its profitability and growth metrics also suggest a robust financial health. However, investors should keep a close eye on the company's growth rates, which currently underperform a significant percentage of global competitors. As always, investors are advised to conduct their due diligence before making investment decisions.
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