Does BAT offer a better investment opportunity in a declining market?

0
By:

Motiur Rahman

on
May 21, 2022

British American Tobacco has a dividend yield of 6.33% compared to that of Altria Group at 6.77%.

Altria Group has poorer PE and PEG ratios and the capital gains trailed British American Tobacco.

British American Tobacco is a better buy for the declining market.

Altria Group (NYSE:MO) and British American Tobacco Industries (LON:BATS) are two stocks that will hold up well in the declining market.

Altria Group is trading at $51.09. This is after declining 6.24% last week and a further 3.68% this week. At the price, Altria Group has a PEG ratio of 2.75 and a forward PE of 10.98. The price could be discounted further to $44 as the company battles bear pressures.


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Altria Group has a dividend per share of $3.60, translating to a dividend yield of 6.77%. The company pays dividends faithfully each quarter. The cash dividend has been growing over the last ten years. Indeed, the stock is an attractive dividend investment.  

British American Tobacco is trading at $42.85. Last week, the stock gained 2.94%, rising further by 1.16%. The price to earnings is 9.33, with PEG at 1.05. The DPS is $2.70 with a dividend yield of 6.33%. While BTI has been paying dividends every quarter, the payout declined over the years. The trend is however showing potential for reversal.

Altria Group trails British American Tobacco

Source – TradingView

Altria Group trails British American Tobacco on price performance. While Altria Group is at a loss position of 17% since 2019, British American Tobacco lost only 1.04%. The performance shows that British American Tobacco offers better value preservation in a declining market.

Summary

British American Tobacco is a better buy. It offers a high dividend yield of 6.33%. Price performance is also more stable in a declining market compared to Altria Group.

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