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British American Tobacco's Huge Yield Is Safe for Now, But Keep an Eye on This Troubled Division
The big reason to buy British American Tobacco (NYSE: BTI) is its lofty 7.1% dividend yield. That's an attractive yield, but the broader market is yielding something around 1.2%, and the average consumer staples stock's yield is 2.6%. That suggests there's additional risk surrounding an investment in British American Tobacco.Indeed, there is, and this one division of the company highlights what you need to be watching.As its name implies, British American Tobacco is a tobacco company. It sells tobacco and other nicotine-related products across various different delivery forms. However, combustible tobacco items make up around 80% of its revenue. Cigarettes account for about 97% of the volume of the combustible products it sells. So, for the most part, British American Tobacco is a cigarette company.Continue reading
The big reason to buy British American Tobacco (NYSE: BTI) is its lofty 7.1% dividend yield. That's an attractive yield, but the broader market is yielding something around 1.2%, and the average consumer staples stock's yield is 2.6%. That suggests there's additional risk surrounding an investment in British American Tobacco.
Indeed, there is, and this one division of the company highlights what you need to be watching.
As its name implies, British American Tobacco is a tobacco company. It sells tobacco and other nicotine-related products across various different delivery forms. However, combustible tobacco items make up around 80% of its revenue. Cigarettes account for about 97% of the volume of the combustible products it sells. So, for the most part, British American Tobacco is a cigarette company.
