Source: Unsplash 

British American Tobacco has the ticker symbol BTI and is a large-cap member of the consumer defensive sector as a tobacco firm. This is my first report on British American Tobacco for this Vista folio. It has been considered in several of my previous portfolios.

Following the acquisition of Reynolds American, British American Tobacco is neck-and-neck with Philip Morris International to be the largest listed global tobacco company--slightly larger than PMI on net revenue, but slightly smaller on volumes. 

British American's Global Drive Brands are Dunhill, Kent, Pall Mall, Lucky Strike, and Rothmans, and it also owns Newport and Camel in the U.S. 

The firm also sells vapor e-cigarettes, including its Vype brand, heated tobacco, with Glo, as well as roll-your-own and smokeless tobacco products. 

'The company holds 31% of ITC Limited, the leading Indian cigarette-maker.

The company distributes its products to retail outlets. British American Tobacco p.l.c. was founded in 1902 and is based in London, the United Kingdom.

Three key data points gauge dividend equities or funds like British American Tobacco:

(1) Price

(2) Dividends

(3) Returns

Those three basic keys best tell whether any company has made, is making, and will make money. 

BTI Price

British American's price per share closed at $39.53 yesterday. One year ago its price was $40.47. Thus, price per share has shrunk about 2% as it recovered from Covid fluctuation. 

Should BTI's stock trade in the range of $30 to $50.00 this next year, its recent $39.53 price might rise by $5.47 to reach $45.00 by May 27, 2022. My estimate is  $6.70 lower of the median of four price estimates from analysts tracking BTI. 

BTI Dividends

British American Tobacco's most recent quarterly dividend of $0.7462 is payable on August 24th and equates to $2.98 annually which will yield 7.55% based on yesterday's $39.53 closing price. British American has paid variable dividends generally increasing annually since 1984 (37 years.)

BTI Returns

Adding the $2.91 annual British American forward-looking dividend to my $5.47 price upside estimate shows an $8.38 potential gross gain, per share, to be reduced by any costs to trade the shares. Say we invest a little under  $1000 in BTI at $39.53 per share, we'd buy 25 shares.

A $10 broker fee (if charged) would be paid half at purchase and half at a sale and might cost us about $0.40 per share.

Subtract that maybe $0.40 brokerage cost from my estimated $8.38 gross gain per share results in a net gain of $7.98 X 25 shares = $199.50 for a 20% net gain on a $988.25 investment.

So it is that British American Tobacco PLC shows a possible 20% net gain including a 7.55% forward estimated dividend yield. 

Over the next year at this time, a $1000 investment in BTI could generate $75.50 in cash dividends. And a single share bought at yesterday's closing price was under $40.00! So, if BTI is your kind of tobacco company investment, British American Tobacco's share price is $35.00 under the expected annual dividend income from $1,000 invested. This suggests now is a good time to add British American Tobacco PLC to your stock holdings. 

All of the estimates above are speculation based on the past history of British American Tobacco PLC. Only time and money invested in this stock will determine its worth.