NYSE: BTI
British American Tobacco, commonly known as BAT, is a British multinational tobacco company that has been in existence for over a century. The company is one of the largest tobacco companies in the world, with a presence in over 180 countries. One of the most attractive features of BAT for investors is its dividend, which has a long history of consistent payouts. In this blog post, we’ll take a closer look at the history of the British American Tobacco dividend.
BAT’s dividend history
British American Tobacco’s dividend history dates back to 1902 when it first paid a dividend of 6.5 pence per share. Since then, the company has been paying out dividends to its shareholders every year without fail. BAT has a long history of consistent dividend growth, with its dividend increasing at a compound annual growth rate (CAGR) of 9.7% over the past 20 years.
BAT’s dividend policy
BAT’s dividend policy is to pay out a dividend that is covered 1.5 times by adjusted earnings per share. The company aims to maintain a progressive dividend policy that is sustainable over the long term. BAT’s dividend policy is designed to provide shareholders with a predictable and growing income stream, while also allowing the company to reinvest in its business to drive growth.
Factors affecting BAT’s dividend
Several factors can affect British American Tobacco’s dividend payout. One of the most significant factors is the company’s earnings. BAT’s dividend payout is directly linked to its earnings, and any significant changes in earnings can impact the dividend payout. Other factors that can affect the dividend payout include changes in the company’s capital requirements, changes in the regulatory environment, and changes in the global tobacco market.
BAT’s dividend yield
BAT’s dividend yield is the ratio of its annual dividend payment to its current stock price. The dividend yield is an important metric for income investors as it provides an indication of the return they can expect to receive from their investment. BAT’s dividend yield has been relatively stable over the past few years, ranging from 4% to 6%. As of May 2023, BAT’s dividend yield stands at 7.54%.
BAT’s dividend reinvestment plan
British American Tobacco also offers a dividend reinvestment plan (DRIP) that allows shareholders to reinvest their dividends in additional BAT shares. The DRIP provides shareholders with a convenient way to increase their holdings in BAT without incurring additional brokerage fees. The DRIP also allows shareholders to benefit from the power of compounding, as reinvested dividends generate additional income that can be reinvested to purchase more shares.
Conclusion
In conclusion, the British American Tobacco dividend has a long and consistent history of payouts, with the company paying out dividends every year since 1902. BAT’s dividend policy is designed to provide shareholders with a predictable and growing income stream while also allowing the company to reinvest in its business to drive growth.
Several factors can affect the dividend payout, including changes in the company’s earnings, capital requirements, and regulatory environment. However, BAT’s dividend yield has remained relatively stable over the past few years, providing investors with an attractive return on their investment. With its DRIP, BAT also offers investors a convenient way to reinvest their dividends in additional shares, allowing them to benefit from the power of compounding over the long term.
