uk financial news This FTSE 100 heavyweight share is smoking hot. I'd buy more today! - The Motley Fool UK uk insurance news
Breaking-Finance.Com - This £60bn FTSE 100 giant has been a dividend darling for decades. I'd buy its shares today for their juicy income stream.
Breaking-Finance.Com - Among FTSE 100 heavyweights, British American Tobacco (LSE: BATS) is like British yeast spread Marmite. You either love it (as Neil Woodford and other income-oriented fund managers do) or hate it (as anti-tobacco activists do). Either way, it’s hard to ignore BAT, as it’s been one of the FTSE 100’s top dividend payers going back decades. BAT is a ‘bad’ FTSE 100 business BAT is a very simple multinational business – and has been since it was founded 118 years ago in 1902. By sales, it is the largest cigarette maker in the world and also manufactures tobacco and other nicotine products.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air… And if you click here we’ll show you something that could be key to unlocking 5G’s full potential... Though smoking is in decline globally, the firm’s position as market leader still enables it to raise prices and grow. But, of course, smoking is highly addictive, harmful, and often fatal, so BAT is the very opposite of an ethical business. BAT is a brilliant FTSE 100 business Ethics aside (and I speak as a lifelong smoker), BAT is an absolute powerhouse of the FTSE 100. As I write, its shares trade at 2,585p, valuing this titan at £59.3bn. From an investment standpoint, what’s awesome about BAT is that it is one of the biggest dividend payers in the entire FTSE 100. Indeed, in its half-year results released today, the company committed to paying out almost two-thirds (65%) of its earnings in cash dividends to shareholders. Nice. BAT bounces back from Covid-19 In its half-year results, BAT unveiled revenues of almost £12.3bn, up a modest 0.8% year on year. However, profit from operations surged a sixth (16.4%) to £5.1bn, aided by a 5.5 percentage-point increase in its operating margin to 41.5%. Basic earnings per share (EPS) leapt 22.7% to 151.2p, as did diluted EPS to 150.7p.
.3% to nearly £3.5bn, while net debt rose just 0.3% to £50.4bn.
BAT is a FTSE 100 fortress
BAT’s latest set of figures were more upbeat than previous updates. This is largely due to smokers puffing on premium brands during the pandemic, despite earlier warnings of downgrades and depressed volumes. US sales were notably resilient, thanks to government stimulus payouts allowing smokers to stick with familiar brands.
Then again, falling sales in emerging markets and at duty-free outlets such as airports hit sales volumes. Sales slid 6.3% to 315bn fags. Likewise, the ongoing tobacco sales ban to curb the coronavirus has driven South African sales onto the black market.
Good results make BAT shares cheaper!
Although BAT has been a favourite among income investors for decades, this latest news sent its shares lower in a weak week for the FTSE 100. Currently, the share trades at 2,585p, down 72p (2.7%) today – which is good news for income-hungry investors looking to buy now.
BAT shares are cheap and offer a bumper dividend almost unmatched anywhere else in the FTSE 100. They trade on a price-to-earnings ratio below 10.5 and a dividend yield of 8.1%. They are also more than £9 cheaper than they were in mid-January. That’s why I’d happily buy and hold them today for income. A top income share that boasts a reliably defensive business model… plus a current forecast dividend yield of 4.2% to boot! With global markets in turmoil as the coronavirus pandemic tightens its grip, turning to shares to generate income isn’t as simple as it used to be…
As the realities of ‘life under lockdown’ begin to bite, many of the stock market’s ‘go-to’ high-yielding companies have either taken an axe to their dividend pay-outs… or worse, opted to suspended them altogether – for the near-term at least.
With so many blue-chip and mid-cap companies scrambling to hoard cash right now, where are we income investors to turn for decent yields?
Fortunately, The Motley Fool is here to help…
Our analyst has unearthed what he believes could be a very attractive option for income- seeking investors – a company that, in his view, boasts a ‘reliably defensive’ business model, combined with a current forecast dividend yield of 4.2% to boot!*
But here’s the really exciting part…
This business even has form in riding out this kind of situation, too… having previously increased sales and profits back in 2008 and 2009 when the world was gripped in the deepest economic crisis since the Great Depression.
*Please be aware that dividends are variable and not guaranteed. Click here to claim your copy of this special report now — and we’ll tell you the name of this Top Income Share… free of charge! Cliffdarcy has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
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