The Tobaccos

[moorfield]

The next annual report and financial statements, expected in February, will best answer some of the questions here about BATS and its dividend.

For those who have the time and the inclination to plough through them, I thoroughly recommend (if I'm allowed to here) using Phil Oakley's "How to Pick Quality Shares" book. I've read it three times and intend to "do an Oakley" on all my holdings over the next few months, starting with WPP which is next in line for a top-up.

Ask a relative to pop a copy into your Christmas stockings ...

[monabri]

WPP at 847p....it'd be interesting to see the conclusion from a review using PO's methodology.

[Dod101]

I doubt that the next Annual Report will give us much of a clue re the future of BAT's profits. Pro tem nothing has changed and I expect a further increase in the BAT dividend and a slow recovery in its share price. What we really want to know is what BAT will look like in 10/20 years time. Remember the actions against the tobacco companies over the last 20 years. Obviously there have been a substantial drop in the number of cigarettes smoked but profits keep rising with wonderful free cash flow.

It looks at the moment though that BAT's buying the rest of Reynolds tobacco was not necessarily a brilliant idea but who knows how this will play out?

Dod.

[idpickering]

For me the current downward trend with the fag stocks is quite timely, as I'm topping up IMB on Thursday, and might top up BATS next month.

Ian.

[monabri]

For me the current downward trend with the fag stocks is quite timely, as I'm topping up IMB on Thursday, and might top up BATS next month.

Ian.

Ian, isn't that unusual for you ( to top up on an XD day. 22nd November)?

[idpickering]

For me the current downward trend with the fag stocks is quite timely, as I'm topping up IMB on Thursday, and might top up BATS next month.

Ian.

Ian, isn't that unusual for you ( to top up on an XD day. 22nd November)?

Hi monabri, this is true. My understanding is that provided I hold x number of shares at the end of that session, then that equates to qualifying shares for the dividend. Not only that, the IMT share price will be lower that day hopefully.

Ian.

[Bouleversee]

For me the current downward trend with the fag stocks is quite timely, as I'm topping up IMB on Thursday, and might top up BATS next month.

Ian.

Ian, isn't that unusual for you ( to top up on an XD day. 22nd November)?

Hi monabri, this is true. My understanding is that provided I hold x number of shares at the end of that session, then that equates to qualifying shares for the dividend. Not only that, the IMT share price will be lower that day hopefully.

Ian.

Surely if you buy on x-d day you don't get the div. though the price is likely to be lower that day. Why would the price go down if you were also getting the dividend? You would have to buy the day before it goes x-d to get the div. and the following day, i.e. the x-d day, the price will probably (not always) be correspondingly lower than you paid. (Unless I have completely lost my marbles)

[monabri]

If you buy on Thursday, you are buying IMB ex-dividend. That's my understanding, hence the query.

edit - that's how I see it too, Bouleversee....marbles "intact".

[idpickering]

Bouleversee and monabri, you are correct. Buying on ex divi day does not entitle one to the divi. Have to buy the day before. My error, sorry. You'd think I knew better. Must be having a bad hair day.

Ian.

[monabri]

Bouleversee and monabri, you are correct. Buying on ex divi day does not entitle one to the divi. Have to buy the day before. My error, sorry. You'd think I knew better. Must be having a bad hair day.

Ian.

It's that bracing Northern air... I thought though that as the Halifax cheap dealing day is Wednesday 21st Nov, then what you really meant was a top up on the 21st?

[idpickering]

Bouleversee and monabri, you are correct. Buying on ex divi day does not entitle one to the divi. Have to buy the day before. My error, sorry. You'd think I knew better. Must be having a bad hair day.

Ian.

It's that bracing Northern air... I thought though that as the Halifax cheap dealing day is Wednesday 21st Nov, then what you really meant was a top up on the 21st?

Thanks for your continued input monabri. My account with Halifax has a monthly investment charge of only £2 plus stamp duty, so that's cheap enough for me. I could always let the IMB transaction stand, and VOD that is also scheduled, and accept the fact that the shares I buy will have missed out on that ex divi day, but I will be buying the shares cheaper because of it (ex div).

As for the very Northern air, it's relatively still today for a change.

Ian.

[moorfield]

Here's a different angle.

Would you prefer right now a fixed dividend at 6.5% or the BATS dividend at 7.0%, or indeed the IMB dividend at 7.1% ?

An opportunity presents itself to swap out one of my preference share holdings ...

[Bouleversee]

Personally, at my age, I'd be inclined to stick with the fixed interest bond. Where can I get one? A lot will happen in the market in the next few months and it will be very easy to lose money if your crystal ball isn't working. There is no sign to tell us when the bottom has been reached.

[idpickering]

Just to clarify my intentions, the top up of Imperial Brands and Vodafone will go ahead in my HYP tomorrow, irrespective that they may well be going ex dividend. Got to have a longer term focus, rather than trying to be too clever for my own boots.

Ian.

[Dod101]

Here's a different angle.

Would you prefer right now a fixed dividend at 6.5% or the BATS dividend at 7.0%, or indeed the IMB dividend at 7.1% ?

An opportunity presents itself to swap out one of my preference share holdings ...

I think that despite my feelings about the capital loss (on paper only but still a loss) I would if I did not have enough of both, buy either of them. Their dividends look secure enough to me and will probably continue to increase. On balance I would buy Imperial, not because of the modestly higher yield but because a) it is less exposed to the US b) it has a lower debt burden and c) its dividend has been increasing at 10% pa and there is no indication that this will not continue. If you want another reason then because its market cap is still a bit smaller than BAT, it might be a takeover target sooner or later. I am assuming that that is the case even after the recent falls.

Dod

[Arborbridge]

Personally, at my age, I'd be inclined to stick with the fixed interest bond. Where can I get one? A lot will happen in the market in the next few months and it will be very easy to lose money if your crystal ball isn't working. There is no sign to tell us when the bottom has been reached.

Or when the top has been reached, or indeed, passed.


Arb.

[mike]

On balance I would buy Imperial, not because of the modestly higher yield but because [....] c) its dividend has been increasing at 10% pa and there is no indication that this will not continue.

In their latest results, for the first time since Imps started the 10% pa increases, the board did not give any indication of future increases.

Compare

2016

The Board has approved a further interim dividend of 54.1 pence per share and will propose a final dividend of 54.1 pence per share, bringing the total dividend for the year to 155.2 pence per share, up 10 per cent and in line with our policy of growing dividends by at least 10 per cent per year over the medium term.

2017

The Board has approved a further interim dividend of 59.51 pence per share and will propose a final dividend of 59.51 pence per share, bringing the total dividend for the year to 170.72 pence per share, up 10 per cent and in line with our policy of growing dividends by at least 10 per cent per year over the medium term.

2018

The Board has approved a further interim dividend of 65.46 pence per share and will propose a final dividend of 65.46 pence per share, bringing the total dividend for the year to 187.79 pence per share.

In what are very much copy & paste paragraphs, there is one sentence missing in 2018, that concerning the future. As a result of this hint by omission, I have reduced my forecast rise for 2019 from 10% to 5%. That way, I stand a better chance of being pleasantly suprised rather than disappointed.

Mike


Links
2016 https://www.investegate.co.uk/imperial-brands-plc--imb-/rns/final-results/201611080700085802O/
2017 https://www.investegate.co.uk/imperial-brands-plc--imb-/rns/final-results/201711070700037546V/
2018 https://www.investegate.co.uk/imperial-brands-plc--imb-/rns/final-results/201811060700034532G/

[Arborbridge]

its dividend has been increasing at 10% pa and there is no indication that this will not continue.

Dod

Other than the fact that it is mathematically impossible for more than a limited time - unless they intend to take over the whole world's economic output and on second thoughts, even then, it would not be possible.

[Dod101]

Arb

Point taken and maybe Mike has found the hint, but I expect the dividend will continue to increase at least. That is why forecasting is so difficult. As you would expect I can see no point in speculating, sorry I mean forecasting. I just assume the same for the next year and hope to be pleasantly surprised.

Dod

[Gengulphus]

I thought though that as the Halifax cheap dealing day is Wednesday 21st Nov, then what you really meant was a top up on the 21st?

Thanks for your continued input monabri. My account with Halifax has a monthly investment charge of only £2 plus stamp duty, so that's cheap enough for me. ...

That's the difference between the monthly Halifax cheap dealing day (or to be precise, couple of hours over lunchtime if they're UK shares) and the 4-times-monthly Halifax ShareBuilder regular investment days. The former has a £3.95 commission and applies to trades made entirely normally as long as they're made at the right time; the latter has a £2.00 commission, only applies to purchases, will spend exactly the amount you state (crediting you with fractional shares to do so if necessary - which I've never known it not be) and requires one to enter the purchase(s) by midnight on the day before the regular investment day.

Either can be done with a ShareBuilder account - it just depends whether you use the normal trading facility or the regular investment facility to enter the order. I'd be reasonably certain that only the former is available with a non-ShareBuilder account, though as I don't have a non-ShareBuilder account with them, I cannot be absolutely certain of that.

Worth reminding all Halifax share account holders here that this month's 2-hour slot for cheap dealing starts at 12:15, just under an hour after I've posted this.

Gengulphus