Here's Why British American Tobacco Stock Could Double
Shares of British American Tobacco (NYSE: BTI) are down about 33% since peaking in early 2022, and they're down nearly 60% from their all-time high. On the surface, this poor performance makes sense. While demand for tobacco products is strong in some geographic regions, tobacco usage in the U.S. is in a perpetual decline. The company expects global tobacco industry volumes to drop 3% this year, with the U.S. driving much of that decline.
One of the main reasons to own British American Tobacco stock is the dividend. With tobacco volumes trending downward, investors are right to ask whether the dividend can be sustained, let alone grow. The relentless pessimism that has driven down the stock price has pushed up the dividend yield to nearly 10%. More often than not, ultra-high yields are a sign of trouble rather than opportunity.
In this case, British American Tobacco looks like a solid value and a dividend stock that's been unfairly beaten down. Based on its pessimistic valuation and its progress in diversifying away from traditional cigarettes, the stock has the potential to reclaim its all-time high and double from where it trades today.
Source Fool.com
