Core Viewpoint - The article emphasizes the attractiveness of high-yield investments, particularly British American Tobacco (BTI) and MPLX LP, as viable options for income-focused investors amid changing interest rate dynamics [3][6]. British American Tobacco (BTI) - BTI has a market capitalization of approximately $77 billion and offers a dividend yield of around 8.5%, reflecting the inherent risks in the tobacco industry [4]. - Despite a 0.8% contraction in topline revenue, BTI's earnings per share (EPS) increased by 1.3% in H1 2024, aided by a lower share count and reduced financing costs [4]. - The company anticipates organic growth of 3% to 5% and mid-single-digit growth in adjusted profits from operations by 2026, with a net leverage goal of 2x to 2.5x by year-end [4]. MPLX LP - MPLX, with a market cap exceeding $40 billion, provides a distribution yield of approximately 7.9%, supported by stable revenue from logistics and storage businesses [5]. - The adjusted EBITDA growth has outpaced periodic escalators at around 6.4%, driven by organic growth and M&A investments [5]. - MPLX's distributable cash flows (DCF) have increased significantly, with an annualized Q1 2024 DCF of about $5.3 billion, allowing for surplus liquidity after covering dividends and necessary investments [5]. Market Dynamics - The article notes a potential normalization of interest rates, which could lead to increased asset prices and reduced attractiveness of current dividend yields [6][7]. - Recent data indicates the possibility of interest rate cuts, contributing to a favorable environment for income-generating assets like REITs and bonds [7].

Core Viewpoint - BTI is seen as an undervalued company with strong financials and a significant opportunity for growth, particularly in the smokeless product segment, despite the ongoing stigma surrounding the tobacco industry [2][9][13]. Financial Performance - BTI's shares have increased by 16.81% since early April, outperforming the S&P 500, which rose by 4.10%. The total return, including dividends, is 19.62% [2]. - The company generated $15.99 billion in EBITDA over the trailing twelve months, resulting in a net debt to EBITDA ratio of 2.67x, indicating a strong financial position [6]. - In Q2, BTI reported $7.8 billion in revenue and a gross profit of $6.43 billion, achieving a gross profit margin of 82.46% and a profit margin of 36.4% [13]. Product Portfolio and Market Strategy - BTI has a diverse product portfolio, including traditional cigarettes and a growing range of smokeless products, with 17.9% of revenue now coming from smokeless products, up 1.4% since the end of 2023 [3]. - The company added 1.4 million consumers to its smokeless brands in Q2, bringing the total to 26.4 million [3]. - BTI has received authorization to market its Vuse Alto device in the U.S., which is expected to enhance its performance in the coming years [3]. Valuation and Growth Potential - BTI is trading at less than 8 times earnings, with expected earnings growth of 5.35% over the next two years, making it a compelling value opportunity compared to peers like Altria Group and Philip Morris [7]. - The company is projected to generate $10.8 billion in earnings from operations in the 2024 fiscal year, with a dividend payout of $2.97 per share, representing 61.11% of projected EPS [8]. Share Buyback and Retained Earnings - BTI repurchased 15.19 million shares in the first half of 2024 and plans to allocate GBP700 million ($901.04 million) for buybacks in 2024 and GBP900 million ($1.16 billion) in 2025, while retaining $3.3 billion in earnings for further investments [8]. - After paying dividends, BTI expects to retain $4.2 billion in profitability from 2024's earnings, allowing for continued deleveraging and investment in growth [8]. Market Outlook - The tobacco industry is perceived to be undervalued, and BTI's recent share price increase may signal the beginning of a sustainable rally, driven by strong profitability and a high dividend yield exceeding 8% [9][14]. - The market may start to favor value companies, positioning BTI favorably for future appreciation as it continues to deliver strong financial results [9][14].

Core Viewpoint - British American Tobacco (BTI) remains fundamentally sound despite recent challenges, with a strong dividend yield and potential for growth driven by improved macroeconomic conditions and successful business strategies [4][6][9]. Financial Performance - BTI's total revenue decreased by 0.8%, while adjusted profit from operations declined by approximately 5%. However, earnings per share (EPS) increased by 1.3% due to lower net financing costs and a reduced share count from share buybacks [11]. - The company managed to expand its margins by 100 basis points during H1, 2024, despite a declining top-line, aided by efficiency gains and strong contributions from new category segments [11]. Market Dynamics - The macroeconomic outlook is improving, with lower financing costs expected to enhance consumer demand for BTI's products. Recent data indicates a decrease in inflation and a potential Federal Reserve interest rate cut by the end of the year [6][7]. - BTI added 1.4 million smokeless consumers, contributing 18% to group revenue and generating an incremental GBP 165 million in cash flow. The contribution margin from new categories expanded by 10% [11]. Future Outlook - Management anticipates organic revenue growth of 3% to 5% and mid-single-digit adjusted profit from operations growth on an organic constant currency basis by 2026 [11]. - The company aims to achieve a leverage ratio of 2-2.5x adjusted net debt to adjusted EBITDA by the end of 2024, indicating a focus on optimizing the balance sheet and reducing financial risk [8][11].

Financial Performance - Net cash generated from operating activities declined by £210 million, impacted by a £267 million final payment related to settlement agreements[10] - The Group generated £4,122 million from operating activities in the six months ended 30 June 2024, a decrease of 8.9% compared to £4,522 million in 2023[14] - Net cash generated from operating activities was £3,165 million, down from £3,375 million, reflecting a decline of 6.2%[14] - The Group's total comprehensive income attributable to owners of the parent was £4,526 million, compared to a loss of £599 million in the same period last year[23] - The Group reported a profit for the period of £4,559 million for the six months ended 30 June 2024, compared to £4,035 million for the same period in 2023, representing an increase of 12.9%[34] - Total comprehensive income for the period was £4,590 million, which includes a profit of £4,492 million and other comprehensive income of £98 million[34] - The Group's total profit from operations was £4,258 million, down from £6,020 million in 2023, reflecting a decrease of 29.3%[158] - Profit from operations decreased by 28.3% to £4,258 million, with an operating margin of 34.5%, down 9.7 percentage points[58] - The profit for the period was £3,959 million, compared to £4,035 million in the previous period, reflecting a decrease of approximately 1.9%[45] - The Group's profit for the period for the six months ended June 30, 2024, was £275 million, a significant improvement from a loss of £277 million in the prior year[181] Revenue and Sales - Revenue for the six months ended 30 June 2024 was £12,340 million, down 8.2% from £13,441 million in 2023[53] - Reported revenue decreased by 8.2% to £12,340 million, primarily due to the sale of businesses in Russia and Belarus, lower organic Combustibles volume (down 6.9%), and a translational foreign exchange headwind of 4.5%[63] - Revenue from Combustibles fell by 10.1% to £9,856 million, with an organic revenue decline of 2.6% at constant exchange rates[97] - Revenue from New Categories was £1,651 million, down 0.4%, but up 7.4% on an organic constant rate basis[59] - Modern Oral revenue reported a growth of 41.9%, with volume growth of 50.0%, indicating strong market performance[74] - The Group's revenue from the AME region was £4,376 million, a decrease from £4,730 million in 2023, representing a decline of 7.5%[158] - The APMEA region reported revenue of £2,586 million, slightly up from £2,801 million in 2023, showing a modest increase of 10.4%[158] Cash Flow and Financing - Net cash from investing activities was £1,433 million, an improvement of £1,392 million from the previous year, primarily due to £1,577 million net proceeds from the partial monetisation of investment in ITC[10] - Net cash used in financing activities was an outflow of £3,358 million in 2024, compared to a £3,023 million outflow in the previous year[11] - The Group maintained investment-grade credit ratings from Moody's (Baa2), S&P (BBB+), and Fitch (BBB+), supporting its ability to access debt capital markets[9] - The Group had access to a £5.4 billion revolving credit facility, which was undrawn as of 30 June 2024[9] - The Group repurchased bonds prior to their maturity in a principal amount of £1.8 billion as part of a capped debt tender offer in May 2024[9] - The Group's liquidity remains strong, with an average debt maturity of 9.2 years and a fixed debt profile of 84%[69] - Closing net debt was £33,658 million, down from £38,345 million in June 2023, reflecting a significant reduction in financial liabilities[139] Impairments and Adjustments - The Group recognized an impairment of £472 million for Camel Snus due to a forecasted decline in cash flows, with a 5-year volume CAGR of -10.2%[16] - Amortization and impairment of trademarks and similar intangibles amounted to £1,295 million, significantly higher than £108 million in the same period last year[20] - Total adjusting items included in profit from operations reached £1,306 million, compared to £85 million in 2023, indicating a substantial increase[20] - The effect of impairment of intangibles and other assets was £373 million for the six months ended June 30, 2024, compared to £68 million in 2023, indicating increased impairment charges[171] Market and Consumer Trends - The number of consumers of smokeless products increased by 1.4 million to 26.4 million[58] - The company experienced robust combustibles pricing, with volume and value share gains in AME and APMEA, offset by declines in the U.S.[62] - Modern Oral revenue increased by 122%, driven by a 226% rise in volume following the refreshed Velo brand and the national roll-out of Grizzly Modern Oral[124] - The Group's share of post-tax results of associates and joint ventures showed a significant credit of £1,367 million in the first half of 2024, compared to a charge of £15 million in the same period of 2023[28] Tax and Legal Matters - The Group's tax rate was affected by adjusting items, with a total of £36 million in adjusting items included in taxation for the six months ended 30 June 2024[32] - The Group's exposure to tax obligations includes a provision for potential exposure to tax, interest, and penalties of BRL969 million (£138 million) for the 2020-2023 period due to ongoing tax audits[172] - The Group paid US$332 million (approximately £267 million) to the U.S. Department of Justice in June 2024 as a final settlement for a previously disclosed investigation[179] - As of June 30, 2024, the Group's subsidiaries faced 252 pending Engle progeny cases involving approximately 311 individual plaintiffs[182] Management and Governance - The company appointed Soraya Benchikh as Chief Financial Officer effective May 1, 2024, following changes in the Board[47] - The Group's management believes that value share is particularly useful for investors to understand the performance of BAT's brands relative to competitors in various categories and geographies[200]

Group 1: Dividend Stocks Overview - Seven outstanding dividend stocks are highlighted for their attractive yields and solid fundamentals, making them ideal for long-term investment strategies [1] - These companies exhibit solid dividend yields, strategic growth initiatives, and diversified portfolios, which are essential for long-term dividend stocks [2] Group 2: Pfizer (PFE) - Pfizer returned $2.4 billion to shareholders via dividends and invested $2.5 billion in internal research in Q1 2024 [3] - The company paid down approximately $1.25 billion in maturing debt and reduced its equity position in Haleon from 32% to 23% [3] - Pfizer's stock has a forward dividend yield of 5.7%, with a goal of achieving at least $4 billion in net cost savings by the end of 2024 [7] Group 3: Oaktree Specialty Lending (OCSL) - Oaktree Specialty Lending focuses on first-lien loans, enhancing portfolio security and stability, with a forward dividend yield of 12.3% [4] - The company's first-lien investments increased from 71% of the portfolio in September 2022 to 81% currently [4] - In Q1 2024, Oaktree Specialty made $396 million in new commitments, with a weighted average yield on new debt investments at 11.1% [10] Group 4: Realty Income (O) - Realty Income is a monthly dividend company with a forward dividend yield of 5.5%, investing $598 million across various regions in Q1 2024 [13] - Over half of the investments, approximately $323 million, were directed towards Europe and the U.K., achieving an initial weighted average cash yield of 8.2% [13] - The company diversifies its investments across retail, industrial, and data centers, leading to risk spread and demand capture [14] Group 5: Verizon (VZ) - Verizon's stock has a forward dividend yield of 6.8%, with significant growth in its broadband business, adding 391,000 broadband users in Q2 2024 [17] - The company now has over 11.5 million broadband customers, reflecting a 17.2% yearly increase, with fixed wireless subscribers growing by approximately 69% [18] - Verizon's focus on broadband expansion and customer retention strategies supports its long-term dividend stock status [19] Group 6: AT&T (T) - AT&T's stock has a forward dividend yield of 6%, with 252,000 new AT&T Fiber subscribers added in Q1 2024 [21] - The total number of fiber locations reached 27.1 million, with nearly 8.6 million fiber subscribers, and consumer broadband revenues increased by 7.7% [21] - The integration of 5G and fiber services enhances customer retention and profitability, solidifying AT&T's position among long-term dividend stocks [22] Group 7: British American Tobacco (BTI) - British American Tobacco has a forward dividend yield of 8.9%, with consumer numbers reaching 23.9 million, excluding 1.5 million in Russia [25] - The company achieved profitability in new categories two years ahead of schedule, with a £400 million improvement from last year [26] - The contribution margin in top new category markets exceeded 20%, indicating strong market demand and strategic execution [26] Group 8: Altria (MO) - Altria's stock has a forward dividend yield of 7.9%, with its e-vapor division (NJOY) expanding to over 80,000 locations [28] - NJOY's retail share in the U.S. multi-outlet and convenience channel grew to 4.3%, indicating strong consumer acceptance [29] - Altria's increasing market share and strong retail presence position it among the top long-term dividend stocks [29]

Interim Results 2024 The information contained in this presentation in relation to British American Tobacco p.l.c. ("BAT") and its subsidiaries has been prepared solely for use at this presentation. The presentation is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would require any registration or licensing w ...

For investors unbothered by "sin stocks," tobacco companies have been solid dividend plays for a great many years. That might be surprising given the concentrated anti-smoking movements throughout the world, but there are still millions of consumers who enjoy lighting up or puffing on a vape regardless. A veteran producer While tobacco consumption remains sufficient to prop up an industry, it hasn't escaped the effects of those antismoking moves. The sales needle isn't moving much for even the most successf ...

Core Viewpoint - British American Tobacco p.l.c. (BTI) continues to present a compelling investment opportunity due to its strong financial performance, particularly in the New Category segment, which has achieved positive margins for the first time [2][8] Group 1: Financial Performance and Stock Returns - BTI's stock has delivered a return of +10.1% and total returns of +12.8% (including dividends) since April 2024, outperforming the wider market's +7.7% [2] - The company reported robust FY2023 financial metrics, with a significant increase in Free Cash Flow and a healthier balance sheet [2] - BTI's forward P/E valuation stands at 6.91x, significantly lower than peers like Philip Morris (PM) at 16.61x, indicating potential undervaluation [6] Group 2: Market Position and Competition - BTI's Vuse maintains a leading market share of 41.1% in the e-cigarette segment, although it has seen a slight decline due to competition from illicit products [3] - The US government has initiated a task force to combat illegal e-cigarette sales, which may improve Vuse's sales in H2'24 [3] - Competition is expected to increase with Philip Morris' IQOS gaining market share globally and Altria's recent FDA approvals for menthol-flavored products [4] Group 3: Growth Opportunities in Oral Tobacco - BTI's Velo has experienced impressive growth, with volumes sold increasing by +34.4% YoY and revenues by +38.9% YoY in FY2023 [9] - The oral tobacco segment is projected to grow significantly, with market analysts expecting a CAGR of +30% through 2030, providing a growth driver for BTI [9] - BTI aims for £5B in New Category revenue by 2025, building on a £398 million increase to Group profit in FY2023 [6] Group 4: Shareholder Returns and Future Outlook - BTI offers a forward dividend yield of 9.22%, significantly higher than its peers, enhancing its attractiveness as a dividend stock [13] - The company has announced a £700M share repurchase program for 2024 and £900M for 2025, reflecting strong shareholder return strategies [13] - The stock is projected to appreciate by +35% to a long-term price target of $44.10, reinforcing the investment thesis [13]

With most stocks trading at premium valuations, investors can get a safe and simple return from this dividend giant. The market has soared since the beginning of 2023. The S&P 500 index has posted a total return level of 48% over that time frame, pushing the index's price-to-earnings (P/E) ratio of nearly 29. This is much higher than the long-term market average, with many popular stocks such as Apple, Nvidia, and Microsoft trading at even higher multiples. High earnings ratios likely mean high risks for st ...

The stock market keeps hitting new all-time highs. For investors in growth and technology stocks, the future has never looked brighter. British American Tobacco (BTI) In fact, British American Tobacco took a large writedown on the value of its cigarette brands last year. At the same time, it noted that growth in its alternative nicotine products category is ahead of schedule. The company's long-term business model evolution is working. Even the normally recession-resistant consumer staples stocks are under ...