British American Tobacco Results

[Arborbridge]

I bought on 19th Feb at 27.48, luckily. I expect that the share price might settle back a bit, but Dod's right: the yield is still excellent. Further if good news is making the market buy into the shares, that can only give you some re-assurance that you are on the right track.

Buying when momentum is with you, but the yield is high enough is something of a goldilocks scenario, in my view - and far better than doing the opposite


Arb.

[monabri]

https://www.londonstockexchange.com/exc ... 99822.html

"An opportunity to settle all outstanding Canadian tobacco litigation"


Might be a good move to accept the deal if applies to ALL Canada...there are some very (scary) big financial outlined in the annual report.

viewtopic.php?p=205178#p205178

[idpickering]

I can never understand the fickleness of investors. BATS finished today down 3.5%! As a HYPer I shall ignore this market kerfuffle, and think longer term than just today. I'm most certainly not selling my holdings. Strange days indeed.

Ian.

[Dod101]

In an earlier statement, BAT said that it had given no guarantees to its Canadian subsidiary so the alternative for the plaintiffs would be to see it go into liquidation and it looks as if everyone accepts that that is in no-ones' interest. I suppose that this is simply another step in a very long running saga. Tobacco companies of course have a huge amount of experience in dealing with litigation, but I cannot feel that any of this is particularly conclusive or very good news or otherwise for BAT or its Canadian subsidiary. This is one of those occasions when pyad's SI might be appropriate.

Dod

[Arborbridge]

This is one of those occasions when pyad's SI might be appropriate.

Dod

I don't believe one can cherry pick SI

[moorfield]

I can never understand the fickleness of investors. BATS finished today down 3.5%! As a HYPer I shall ignore this market kerfuffle, and think longer term than just today. I'm most certainly not selling my holdings. Strange days indeed.

Very wise Ian. I'm guessing the "kerfuffle" you've described has not much changed the yield of your portfolio overall today? That's 3 minutes of your life posting that here you won't get back.

I can't help thinking that announcement from BATS may have something to do with Canada's growing [sic] Cannabis industry ...

[Dod101]

This is one of those occasions when pyad's SI might be appropriate.

Dod

I don't believe one can cherry pick SI

???????
Dod

[Arborbridge]

This is one of those occasions when pyad's SI might be appropriate.

Dod

I don't believe one can cherry pick SI

???????
Dod

Either one suscribes to SI or one doesn't. Otherwise one is using judgement with all that entails, not SI. A HYPer would not switch SI on and off to suit himself.

And, by the way, it was a tongue in cheek remark known to be controversial

[idpickering]

Very wise Ian. I'm guessing the "kerfuffle" you've described has not much changed the yield of your portfolio overall today? That's 3 minutes of your life posting that here you won't get back.

Very true moorfield. I do waste a lot of time here. The constant bickering might just force my hand to not bother coming here at all.

Ian

[Walrus]

The tobacco shares are very sensitive to any news, good or bad it would seem. To Walrus I would say, if he thinks BAT was good enough at £27 it is still surely good enough at say £31. The difference in yield must be very modest and the dividend is not I think in any danger. Maybe wait a day or for the initial excitement to wear off but of course that risks the price rising further.

Dod

I'm going to be honest here admitting something I hadn't fully thought through.

In my mind I was viewing a 5 percent increase as effectively being a 2.5% reduction in the dividends I will receive forever on that purchase, which seemed intuitively significant. Hopefully my maths is right

However if I consider that to be the same dividend stream I would have purchased previously just at an increased initial purchase cost of 5%, it doesn't seem so expensive and I get to the same conclusion as you.

Does that make sense. I think the underlying issue is that I am not discounting my future income and risk to that income to the same level as the market is, which is why I guess I'm so keen on buying

[pyad]

I'm going to be honest here admitting something I hadn't fully thought through.

In my mind I was viewing a 5 percent increase as effectively being a 2.5% reduction in the dividends I will receive forever on that purchase, which seemed intuitively significant. Hopefully my maths is right

However if I consider that to be the same dividend stream I would have purchased previously just at an increased initial purchase cost of 5%, it doesn't seem so expensive and I get to the same conclusion as you.

Does that make sense. I think the underlying issue is that I am not discounting my future income and risk to that income to the same level as the market is, which is why I guess I'm so keen on buying

Does that make sense?

No it doesn't. You are confusing dividend and yield, a common mistake. The former is the absolute cash payout, the latter is the ratio in percentage of div to share price.

For example a share has an annual div of 5p and a price of 100p so the yield is 5.00%. If the price rises 5% to 105p, the new yield falls to 4.76% on the same div of 5p. The price rise does not change the div.

Both the buyers at 100p and at 105p, assuming they each invest the same total amount, will receive the same cash income per share. But the higher price buyer will own fewer shares and therefore a lesser total income on their invested sum.

[Arborbridge]

However if I consider that to be the same dividend stream I would have purchased previously just at an increased initial purchase cost of 5%, it doesn't seem so expensive and I get to the same conclusion as you.

Does that make sense. I think the underlying issue is that I am not discounting my future income and risk to that income to the same level as the market is, which is why I guess I'm so keen on buying

Given sustainability of dividend, ranking of other shares etc etc etc - isn't there only one question to address if you are considering buying?

That is: is the yield I am buying now sufficient for my purpose?

Or maybe I've misunderstood your conversation, for which I apologise.

Arb.

[Walrus]

I'm going to be honest here admitting something I hadn't fully thought through.

In my mind I was viewing a 5 percent increase as effectively being a 2.5% reduction in the dividends I will receive forever on that purchase, which seemed intuitively significant. Hopefully my maths is right

However if I consider that to be the same dividend stream I would have purchased previously just at an increased initial purchase cost of 5%, it doesn't seem so expensive and I get to the same conclusion as you.

Does that make sense. I think the underlying issue is that I am not discounting my future income and risk to that income to the same level as the market is, which is why I guess I'm so keen on buying

Does that make sense?

No it doesn't. You are confusing dividend and yield, a common mistake. The former is the absolute cash payout, the latter is the ratio in percentage of div to share price.

For example a share has an annual div of 5p and a price of 100p so the yield is 5.00%. If the price rises 5% to 105p, the new yield falls to 4.76% on the same div of 5p. The price rise does not change the div.

Both the buyers at 100p and at 105p, assuming they each invest the same total amount, will receive the same cash income per share. But the higher price buyer will own fewer shares and therefore a lesser total income on their invested sum.

If I invest 1,000 before the price rise I get 50 pounds a year dividends forever assuming no growth and no disaster.

If I invest 1,000 after the price rise I get 47.60 dividends per year forever assuming no growth and no disaster.

That is a pretty significant decrease in my eyes in terms of the earning capacity of the initial capital sum. I would Definately say I am getting less dividend income in scenario 2.

My point was that taking the 5% hit today and buying the same number of shares today as I would of before the price rise and 50 pounds more seems a lot more palatable to me than the 5% reduction in dividends that I would receive each year if I simply invested the 1,000.


Presumably because I am not discounting those cash flows in the sane way that the market does.