I opened a new position with the purchase of British American Tobacco p.l.c (BTI)
72 shares @ $35.53 on 11/29/2018.
68 shares @ $33.30 on 12/14/2018.
This increases my forward 12-month dividend income by $352.80 to a total of $7,157.20
I also updated my portfolio page to reflect the change.
My Thoughts
This company is my third company in the tobacco industry that I own. This will most likely be my last as I own a lot for my small portfolio. I will be making another buy of Altria Group (MO) as my last buy of the year.
British American Tobacco currently supports a massive dividend of 7.75%. It sports a 5-year dividend growth rate of 6.48%. therefore, combining both currents yield and growth rate makes for a great one-two punch.
The company has a 5-year dividend yield average of 3.90%. Like I mentioned above, The company is sporting a dividend yield of 7.75% which means that there is a 385 basis point difference.
This tells us that the company dividend yield and stock price is significantly higher and lower respectively.
I find BTI to be undervalued, and I recommend it as a BUY at this time. I have a fair value price at $54.76. This means that BTI is 71% Undervalued based on today’s price of $32.04 (12/20/2018).
Source: Fastgraphs.com
What do you think of the company? Plan on owning it or already do? or why not?
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Not a name I was expecting to see here! But, the company’s dividend growth rate was higher than I expected and that yield is looking juicy after the price tumbled. Do you have any concerns about the company’s payout ratio? Are you planning on adding as their price falls? Or are you happy with this position now and are looking elsewhere?
Bert
Hi Bert! The dividend yield is indeed juicy. I don’t have any concerns about the payout ratio right now. Based on 2017 adjusted earnings of $3.96 and a dividend of $2.48. this gives a payout of 62%. 2018 exected earning is coming in at $4.25. so this year earning will lower the dividend payout ratio a lot. I am happy with my current position of this stock and do not plan on adding any more. I am overweight with tobacco companies. Thanks for stopping by and commenting!! Happy New Year!!!