Hefty dividends at British American Tobacco -- and share price growth, too.
In these uncertain times for share prices, those who invest in solid companies that pay regular dividends will have done better than most -- there haven't been anywhere near the number of successful growth investors as there were a decade ago!
Not that growth shares can't be had -- I actually think there are a few potential ones around -- but at the moment I'm more interested in the kind of thing that investing guru Neil Woodford has had his money in for the past few years.
The Motley Fool report "8 Shares Held By Britain's Super Investor" examines Mr Woodford's approach, and if you have a read of it, you'll see that he invests according to long-term principles that we consider to be very Foolish indeed -- you can click here to get yourself a copy while it's still available and free.
I had a look at one of his picks, Vodafone (LSE: VOD), last week, as that's a share that I have long been a supporter of.
A great dividend record
Today I'm going to look at the FTSE 100 (UKX) firm British American Tobacco (LSE: BATS), which in many ways is very similar.
The most obvious way is in its dividend record, and forecasts for the next two years...
| Year | Dividend | Increase | Yield |
|---|
| 2007 | 66.2p | - | 3.4% |
| 2008 | 83.7p | 26% | 4.6% |
| 2009 | 99.5p | 19% | 4.9% |
| 2010 | 114.2p | 15% | 4.6% |
| 2011 | 126.5p | 11% | 4.1% |
| 2012 (e) | 135.8p | 7.4% | 4.0% |
| 2013 (e) | 150.1p | 10.5% | 4.4% |
While those yields aren't as high as Vodafone's, just look at the rate of increase year on year! That record of rising dividends, which have all been well covered, is one of the reasons the share price has risen strongly, too.
At the end of 2007, the shares stood at 1,795p and, like the rest of the market, the price fell when the credit crunch hit. But British American didn't fall anywhere near as far as many, hitting a modest 2009 low of 1,495p. And since then, the price has powered up to 3,363p. That's an 83% gain from 2007, or a 125% gain for those who got in at the 2009 bottom, on top of all those juicy dividends.
Increasing demand
Another way in which British American is similar to Vodafone is that its products are in increasing demand in the developing world, and they seem to be something that consumers can't do without.
In many ways that's sad, but I make no comments on the ethics of the business here -- that's for you to decide for yourself. My only conclusion is that this sector, which also includes Imperial Tobacco Group (LSE: IMT), another that Mr Woodford holds, is looking very strong from an investment point of view.
I reckon there are other bargain sectors out there right now, too, and I've already cast an eye over the FTSE's housebuilders and at our hard-pressed big miners. And we've taken a look at some other sectors too, in the Motley Fool report "Top Sectors Of 2012" -- you can help yourself to a free copy, here.
Are you looking to profit as a long-term investor? "10 Steps To Making A Million In The Market" is the latest Motley Fool guide to help Britain invest. Better. We urge you to read the report today -- while it's still free and available.
Further Motley Fool investment opportunities:
> Alan does not own any shares mentioned in this article.
