Benzinga - by Surbhi Jain, .
Investors navigating the dynamic tobacco industry often find themselves at a crossroads with two major players: Altria Group Inc (NYSE:MO) and British American Tobacco PLC (NYSE:BTI) aka BAT.
As global trends, regulations and consumer preferences evolve, strategic insights into Altria and BAT are essential for investors trying to figure out which stock is smoking hot.
Altria reported its fourth-quarter earnings today, recording a surprising increase of 9.26% for earnings and 7.58% for revenue. The stock has been trading higher on the beat. BAT’s fourth-quarter results are expected on Feb. 12.
Both Altria and British American Tobacco recognize the changing landscape of the tobacco industry, which is anticipating a decline in global smoking rates by 2025. Consequently, both companies are strategically preparing for a future where traditional tobacco usage diminishes, focusing on alternative products such as vaping and tobacco-heating systems.
Strategic Approaches
Financial Health and Profitability
Dividend Yield
Source: Data and chart – Benzinga
Altria boasts a higher dividend yield with an annualized forward dividend yield of 9.77%, exceeding BAT’s yield of 9.47%.
The sustainability and attractiveness of dividends remain crucial factors for investors, given the limited growth potential in the tobacco industry. Altria’s bigger dividend becomes a compelling reason for potential investors, emphasizing the significance of consistent returns, especially when growth prospects are limited.
Valuation
Data compiled from Yahoo Finance
While Altria appears to be a better dividend stock and attractive on earnings multiple basis, Wall Street analysts see more upside associated with BAT stock.
Data compiled from Yahoo Finance
While Altria stock offers a 16.75% upside from current levels, British American Tobacco stock comes with a 22.33% upside.
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