The Tobaccos

[Dod101]

Purists amongst us will presumably ignore the nearly 9% drop in the BAT share price this morning, and a smaller share price drop with Imps but that feels like more than market noise. What is going on? Does anyone have any idea?

Dod

[Spet0789]

Purists amongst us will presumably ignore the nearly 9% drop in the BAT share price this morning, and a smaller share price drop with Imps but that feels like more than market noise. What is going on? Does anyone have any idea?

Dod

The WSJ reports that the US is considering a ban on menthol cigarettes. That seems to be behind the fall.

I’ve only even seen them smoked by older ladies but I suppose you could consider as them the alcopops of the cigarette market! Imagine the furore if they considered introducing bubblegum flavour fags.

I hold IMB but lack the courage to top it up right now.

[Dod101]

Thanks Spet0789. That would I suppose explain it since BAT has the much larger exposure to the US market. I guess we just need to live with this but that is more than one year's dividend gone this morning. They are beginning to look rather less attractive than they used to and I think I might need to reassess my exposure before long. I have tended just to ride it out and whilst the dividend is not at risk at the moment, I am afraid it is now, to use my phrase, very dearly bought income.

Dod

[YeeWo]

Purists amongst us will presumably ignore the nearly 9% drop in the BAT share price this morning, and a smaller share price drop with Imps

I definitely didn’t ignore it

The WSJ reports that the US is considering a ban on menthol cigarettes. That seems to be behind the fall.

This being a US story it does make you wonder what % of Reynolds profits are menthol related and what would be the rationale behind banning menthol specifically?
At this price BAT must be packing a seriously high and well covered dividend yield?

[PinkDalek]

Purists amongst us will presumably ignore the nearly 9% drop in the BAT share price this morning, and a smaller share price drop with Imps but that feels like more than market noise. What is going on? Does anyone have any idea?

Dod

He's behind you:

viewtopic.php?p=179613#p179613

[jackdaww]

i have been thinking of topping up both .

[Dod101]

So there are two threads. Ah well. Topping up at these levels seems good and we keep saying as long term holders.........but just the same this kind of volatility is not what I look for in boring high yield shares. They are behaving more like tech start ups with a good yield.

Now some might understand why I like Unilever.

Dod

[Walrus]

Didn't see this one coming. May have got lucky holding IMP rather than BAT here but taking a step back from it all, if Menthals are banned wouldn't that simply lead to substitution to other products?

Surely it would be far more likely to ban all tobacco in the US which seems pretty unlikely from where I am sitting. Gut feeling for me is if you were happy holding last week, it's probably an opportunity to top up. Am considering bringing BAT on board here.

[idpickering]

Thanks Spet0789. That would I suppose explain it since BAT has the much larger exposure to the US market. I guess we just need to live with this but that is more than one year's dividend gone this morning. They are beginning to look rather less attractive than they used to and I think I might need to reassess my exposure before long. I have tended just to ride it out and whilst the dividend is not at risk at the moment, I am afraid it is now, to use my phrase, very dearly bought income.

Dod

I mentioned in the parallel thread that I’m ignoring this event and thinking longer term than today. What a buying opportunity imho.

Ian.

[idpickering]

So there are two threads. Ah well. Topping up at these levels seems good and we keep saying as long term holders.........but just the same this kind of volatility is not what I look for in boring high yield shares. They are behaving more like tech start ups with a good yield.

Now some might understand why I like Unilever.

Dod

I have asked the mods to merge them Dod.

Ian.

[Dod101]

Ian

Sorry to have started the second thread. I did not see yours at the time.

Buying anew today makes sense for income I think. Not so sure about topping up. The fact is the businesses are throwing off cash and that seems likely to continue but the capital loss is painful however we try to explain it away and whilst a yield which must be 10% now seems unlikely to continue, I wonder. I expect I will simply keep what I have but I am not keen to add more. Everyone has it in for tobacco at the moment it would seem and if the truth be known, probably rightly so. On that basis I will not add.

Dod

[idpickering]

Ian

Sorry to have started the second thread. I did not see yours at the time.

Buying anew today makes sense for income I think. Not so sure about topping up. The fact is the businesses are throwing off cash and that seems likely to continue but the capital loss is painful however we try to explain it away and whilst a yield which must be 10% now seems unlikely to continue, I wonder. I expect I will simply keep what I have but I am not keen to add more. Everyone has it in for tobacco at the moment it would seem and if the truth be known, probably rightly so. On that basis I will not add.

Dod

Hi Dod, no worries. In the sector IMB weigh in slightly higher than BATS in my HYP, and up until now they’ve made up about 7% in capital value of my HYP, but not now obviously. I think I could quite happily top up either today if that was an option, but I’m not selling anything else to free up the dosh. I may miss this opportunity as my next scheduled top up is on 22nd Nov. Either way, I’m not going to stress about it. It’ll be either of the tobaccos or VOD? I will have a clearer idea tomorrow on VODs reporting.

Ian.

[monabri]

Current yields are (approx)

BATS = 6.2 % (based on 188p/3032p)

IMB = 7.3% ( based on 195p/2662p)


At this level, I wouldn't be surprised if the possibility of a takeover of IMB by Japan Tobacco International is raised.

[IanTHughes]

Purists amongst us will presumably ignore the nearly 9% drop in the BAT share price this morning, and a smaller share price drop with Imps

I am not sure who you mean by "purists" but an HYPer will certainly not ignore the juicy yields now on offer from the two Tobacco giants.

Ian

[Walrus]

Purists amongst us will presumably ignore the nearly 9% drop in the BAT share price this morning, and a smaller share price drop with Imps

I am not sure who you mean by "purists" but an HYPer will certainly not ignore the juicy yields now on offer from the two Tobacco giants.

Ian

First ever purchase of BAT. Always been too expensive for me. Half a holding at 29.95. Hopefully this is isn't a similar experience to buying Vod down from 1.75 to 1.40.

[moorfield]

I'm happy to hold both IMB, BATS for the forseeable future, but I think I'll be paying more attention to their annual reports over the next few years before further top-ups, as I currently plan to be relying on their dividends in the 2030s and 40s ...

One question interests me particularly is the mix of their "upstream" (ie. the tobacco and harvests) and "downstream" (ie. processing and retail) operations. The smarter companies I hope have already put their R&D departments to work investigating alternative uses for generating sales, eg. biofuels see https://www.theguardian.com/sustainable ... renewables

[monabri]

I hope have already put their R&D departments to work investigating alternative uses for generating sales, eg. biofuels see https://www.theguardian.com/sustainable ... renewables

Article from 2012 ( so they would have had plenty of time to think about it)
https://biofuels-news.com/display_news/ ... _biofuel_/

https://www.vapingpost.com/2018/10/23/b ... ernatives/


https://cleantechnica.com/2015/09/02/to ... -years-rd/

[idpickering]

I'm happy to hold both IMB, BATS for the forseeable future, but I think I'll be paying more attention to their annual reports over the next few years before further top-ups, as I currently plan to be relying on their dividends in the 2030s and 40s ...

I read the reports too, but right now I'd be eager to buy these two to lock in the juicy yields, and have the reinvested dividends compound over your time frame. What's not to like?

Ian.

[DrBunsenHoneydew]

Purists amongst us will presumably ignore the nearly 9% drop in the BAT share price this morning, and a smaller share price drop with Imps

I definitely didn’t ignore it

The WSJ reports that the US is considering a ban on menthol cigarettes. That seems to be behind the fall.

This being a US story it does make you wonder what % of Reynolds profits are menthol related and what would be the rationale behind banning menthol specifically?
At this price BAT must be packing a seriously high and well covered dividend yield?

Menthol accounts for 36pc of the US market, according to analysts at Barclays, and generates around a quarter of BAT’s profit as it owns Newport, the biggest menthol cigarette brand in the US.

Menthol cigarettes are harder to give up than regular, so are more valuable than regular as the profits are more persistent.

[monabri]

Can't get menthol cigarettes...simply buy regular ciggies and a bag of mints!