Investment Group Overview - The Dividend Kings is an investing group founded by Dividend Sensei, focusing on high-quality dividend investments to help investors safeguard and grow their money in all market conditions [2] - The group includes a team of analysts (Brad Thomas, Justin Law, Nicholas Ward, Chuck Carnevale, and Sebastian Wolf) who assist members in making more intelligent dividend stock investments [2] - Features offered by the group include 13 model portfolios, buy ideas, company research reports, and a thriving chat community for readers to learn about dividend stock investing [2] Analyst's Position - The analyst has a beneficial long position in BTI shares through stock ownership, options, or other derivatives [2] - The article expresses the analyst's own opinions and is not influenced by compensation or business relationships with any mentioned companies [2]

Group 1 - Notable yield declines have been observed across most high-income generating asset classes over the past couple of quarters [1] - The main factors driving these yield declines include reducing base rates, normalizing inflation, a relatively strong economy, and solid earnings reports [1] Group 2 - Roberts Berzins has over a decade of experience in financial management, assisting top-tier corporates in shaping financial strategies and executing large-scale financings [2] - Significant efforts have been made by Roberts to institutionalize the REIT framework in Latvia to enhance the liquidity of pan-Baltic capital markets [2] - Other policy-level contributions include the development of national SOE financing guidelines and frameworks for channeling private capital into affordable housing stock [2]

Core Viewpoint - British American Tobacco (BTI) offers a high dividend yield of 8.1%, significantly higher than the S&P 500's 1.2% and the average consumer staples' 2.6%, attracting income-focused investors [1][8] Company Overview - British American Tobacco is one of the largest cigarette manufacturers globally, with combustible products making up around 80% of its revenue in the first half of 2024, primarily from cigarettes [2] - The company has a truly global presence, unlike its main competitors Altria and Philip Morris International, which operate primarily in North America [3] Volume Trends - Cigarette volumes have been declining, with a 5.1% drop in 2022, 5.3% in 2023, and a 6.8% decline in the first half of 2024, indicating a worsening trend [4][5] - If the decline continues at a rate of 5% annually, volumes could fall from 250 billion units in 2024 to less than 200 billion by 2029, posing a significant challenge for the company [6][7] Pricing Strategy - The company has managed to offset volume declines through price increases, but there is a limit to how much prices can rise without negatively impacting sales [5] New Categories - British American Tobacco is investing in new categories such as vaping and smokeless tobacco pouches, which saw a volume increase in the first half of 2024, although this segment still represents less than 3% of total revenue [8][9] Investment Risks - The high dividend yield is attractive, but the ongoing declines in cigarette sales present substantial risks, making it unsuitable for conservative dividend investors [10]

Group 1 - The analyst issued a bullish thesis on British American Tobacco (NYSE: BTI) early in 2024, making it one of the largest positions in their portfolio [1] Group 2 - The analyst has a beneficial long position in BTI shares through stock ownership, options, or other derivatives [3]

Industry Overview - The Zacks Tobacco industry is shifting towards smoke-free alternatives due to increasing consumer health awareness and stricter regulations against traditional cigarettes [1][4] - Major companies like Philip Morris International, Altria Group, and British American Tobacco are investing heavily in reduced-risk products (RRPs) to adapt to this market transformation [1][4] Trends Impacting the Industry - The rising popularity of smoke-free options is driven by health risks associated with smoking and government policies aimed at reducing cigarette consumption [4] - Tobacco companies are focusing on innovations in RRPs to enhance user experience and energy efficiency, leading to substantial revenue growth in this segment [4] - Pricing power remains strong in the industry, allowing companies to offset declining cigarette sales volumes despite inflation and changing consumer preferences [2][5] Challenges Facing the Industry - The tobacco industry is experiencing challenges from inflation and changing consumer behavior, which have contributed to reduced cigarette sales volumes [6] - Regulatory restrictions on sales and advertising due to health concerns are also impacting traditional cigarette sales [6] Industry Performance - The Zacks Tobacco industry ranks 44, placing it in the top 18% of over 250 Zacks industries, indicating robust near-term prospects [7][8] - The industry has gained 29.1% over the past year, outperforming the broader Zacks Consumer Staples sector, which grew by 5.5% [10] Valuation Metrics - The industry is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 11.88X, compared to the S&P 500's 22.63X and the sector's 17.28X [11] Company Highlights - **Philip Morris International**: Focused on smoke-free products, aiming to transform into a primarily smoke-free company by 2030, with significant growth from its premium smoke-free brands [13][14] - **Altria Group**: Navigating market uncertainties with strong pricing power and investments in smoke-free products, including the acquisition of NJOY Holdings [15][16] - **British American Tobacco**: Aiming for over 50% of revenues from non-combustible products by 2035, leveraging a multi-category approach to meet global demand for lower-risk nicotine options [16][17]

Group 1 - The article expresses a bullish sentiment on British American Tobacco (NYSE: BTI), advocating for a STRONG BUY rating based on past performance and investment strategies [1] - Sensor Unlimited, leading the investing group Envision Early Retirement, offers solutions for generating high income and growth through dynamic asset allocation, including two model portfolios for different investment strategies [1] - The focus of Sensor Unlimited's expertise includes asset allocation and ETFs related to the mortgage market, commercial market, banking industry, and housing markets [2]

Group 1 - British American Tobacco (NYSE: BTI) is considered undervalued as it is growing earnings while trading at less than 8x free cash flow [1] - The company is identified as having a solid earnings track record, which is appealing to value investors [1] - The focus is on companies that offer a significant margin of safety, leading to attractive dividend yields and returns [1]

Core Viewpoint - Investors are overly focused on rhetoric rather than actual results, with British American Tobacco (BTI) presenting a strong dividend stock opportunity with an 8.8% forward-looking yield [1][2]. Company Overview - British American Tobacco is a London-based company owning several cigarette brands, including Kent, Lucky Strike, and Pall Mall, and has expanded its portfolio with U.S. brands like Newport and Camel through its acquisition of Reynolds in 2017 [3]. - The company also offers non-combustible tobacco products, including heated tobacco options and the vaping platform Vuse [3]. Industry Trends - The global smoking-cessation movement has seen a reduction in smoking rates, with approximately one-third of the world smoking in 2000, down to about one-fifth today [4]. - Despite the decline in smoking rates, the World Health Organization estimates there are still around 1.25 billion regular smokers globally, only slightly down from 1.36 billion in 2000 [7]. Company Strategy - British American Tobacco aims to transition to a predominantly smokeless business by 2035, focusing on vaping and non-combustible products to offset declines in cigarette sales [5]. - The company has maintained stable organic revenue, with the first half of the year showing revenue levels consistent with the previous year, primarily driven by traditional cigarette sales [8]. Financial Performance - British American Tobacco has a strong track record of paying and increasing dividends, with consistent stock buybacks contributing to growing per-share profits [10]. - The current dividend is £0.743 per share, with shares outstanding at 2.212 billion [11]. Investment Considerations - While there are risks associated with regulatory scrutiny of tobacco products, the company’s reliable dividend and strong yield make it an attractive investment opportunity [12][14]. - The stock's price halving since its 2017 peak presents a potential buying opportunity for investors seeking immediate income [14].

Core Viewpoint - British American Tobacco (BAT) offers an attractive dividend yield of 8.6%, significantly higher than the S&P 500's 1.2% and the average consumer staples stock's 2.5%, making it appealing for dividend investors [2][5] Group 1: Dividend Yield and Investment Appeal - The 8.6% yield from BAT is more than double the traditional 4% rule of thumb for retirement withdrawals, which suggests that investors can withdraw 4% of their portfolio annually without depleting their savings [3][5] - High dividend yields allow income investors to avoid selling assets, as they can rely on dividend income to cover living expenses while preserving their principal [4][5] Group 2: Business Challenges - BAT faces significant challenges as its primary business, cigarette sales, has been experiencing a steady decline in volume, with a 6.8% drop in the first half of 2024 and a 5.3% decline in 2023 [7][9] - The company has been raising prices to counteract volume declines, but this strategy may only mask underlying business weaknesses [8][9] Group 3: Sustainability of Dividends - The sustainability of BAT's high yield is in question due to ongoing declines in cigarette volumes, raising concerns about the potential for a dividend cut in the future [9][10] - In 2023, BAT acknowledged the long-term challenges of its U.S. operations, suggesting that they may become worthless in about 30 years, which could jeopardize the current dividend level [10]

Group 1 - The investor has a deep value investment approach, focusing on a 50%-50% allocation between shares and call options [1] - The investment strategy is contrarian and involves high risk, often dealing with illiquid options [1] - The investor prefers stocks that have recently experienced sell-offs due to non-recurrent events, especially when insiders are buying shares at lower prices [1] Group 2 - Fundamental analysis is employed to assess the health of companies, their leverage, and to compare financial ratios with sector and industry averages [1] - Professional background checks are conducted on insiders who purchased shares after sell-offs [1] - Technical analysis is used to optimize entry and exit points, utilizing multicolor lines for support and resistance levels on weekly charts [1]