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British American Tobacco: Mixed H1, But Attractive At 8.0% Dividend Yield

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Librarian Capital


  • H1 results showed strong headlines, but a mixed underlying performance, in line with the low expectations in our investment case.
  • EPS growth was 6.1% in H1 and is guided to be mid-single-digits for 2021 excluding currency, which is likely neutral for U.S. investors.
  • H1 EBIT growth was led by strong cigarette price/mix in the U.S.; other regions saw either low-single-digit EBIT growth or a decline.
  • In New Categories, BAT had aggressive price promotions, but remains a distant #2 in Heat Not Burn and U.S. nicotine pouches.
  • With shares at 2,680.5p, we expect a total return of 69% (19.1% annualized) in just under 3.5 years. The Dividend Yield is 8.0%.

Woman Vaping behind the wheel
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We review our British American Tobacco (NYSE:BTI) (referred here as "BAT") investment case with H1 2021 results released last Wednesday (July 28).

We upgraded our rating on BAT to Buy in March 2020. Since then, shares

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Analyst’s Disclosure: I/we have a beneficial long position in the shares of BTI,PM,MO,SWMA either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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