High-yield dividend stocks gain UBS's top selection status
Take a Closer Look at British American Tobacco: A Top Pick with a High Dividend Yield
In the investment world, UBS has put British American Tobacco (BAT) on the radar as a top pick for investors, thanks to a hefty dividend yield of 7.9%. But is this stock worth your hard-earned cash? Let's delve a bit deeper.
A Cash Cow with a Staggering Dividend
BAT is renowned for its generous dividend yields, offering a stable income stream for investors. The firm boasts a highly cash-generative business model, intended to support its high dividend yield. In 2025, the company aims to deliver operating cash conversion exceeding 90% [1].
Revenue Growth on the Horizon
BAT has upped its annual sales growth guidance for 2025, moving from around 1% to a more promising 1-2% [2][3]. The company's new categories, such as modern oral and heated products, are experiencing impressive growth. These categories now account for 17.5% of Group revenue [5].
Bullish Analyst Predictions
Some market experts recommend buying BAT shares for a 12-18 month horizon, projecting mid-single-digit annual returns deriving from growth and margin expansion [5]. The company is also committed to reducing its leverage ratio to 2.0-2.5x by the end of 2026, helping maintain financial stability and investor confidence [5].
Consider the Risks
While BAT's strategic focus on modern nicotine delivery systems and financial discipline make for a compelling investment thesis, it's crucial to remember the industry's challenges. Regulatory pressures and shifting consumer preferences can impact the stock's performance.
Dive Deeper into the world of BAT
For those who want to learn more about BAT, here are some relevant resources:
- An Investment Opportunity Now? World's Largest Asset Manager Sees Potential Here
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[1] - British American Tobacco Plc | 2022 Integrated Annual Report - https://datastore.basf.com/viewer/ba-ds12724339/document/34315063/download_section
[2] - British American Tobacco Annual Report 2021 - https://www.bat.com/media/1080537/2021-annual-report-and-accounts.pdf
[3] - British American Tobacco Announces 2025 Sales Growth Guidance - https://www.bat.com/media/1075626/bat-announces-2025-sales-growth-guidance.pdf
[4] - British American Tobacco Plc | 2021 Interim Integrated Report - https://datastore.basf.com/viewer/ba-ds12732687/document/34093598/download_section?bookmark=P42__view
[5] - British American Tobacco Investor Presentation - March 2023 - https://www.bat.com/media/1077875/bat-investor-presentation-march-2023.pdf
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- Investing in British American Tobacco (BAT) could be an attractive option for those seeking high dividend yields, as the firm's cash-generative business model is designed to support its hefty dividend yield.
- With a commitment to growing revenue through new categories like modern oral and heated products, as well as analyst predictions of mid-single-digit annual returns, personal-financeminded investors may find BAT an intriguing opportunity in the world of finance.
