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Get $1,000 in Dividend Income: How Much to Invest in British American Tobacco Stock

Reading Time: 2 minutes


Looking for dividend income? Check out British American Tobacco (NYSE: BTI). At its current price and payout, the stock’s dividend yields an impressive 9.5%. How much would you need to invest to produce a passive income stream of $1,000 a year?

Get $1,000 in passive income

By revenue, British American Tobacco is one of the largest cigarette companies in the world. Around half of its sales are from the United States, with the rest split between Europe, Asia, South America, the Middle East, and Africa.

While the use of combustible tobacco is on the decline in several mature markets, including the United States, total tobacco use is still on the rise globally. That’s especially true when you factor in smokeless products such as vapes and nicotine pouches — which the company also sells. Over the next four years, tobacco use is expected to grow by around 2.5% annually, according to a report by Statista.

This steady and growing demand has produced reliable cash flows for British American Tobacco. In 2018, it generated $8.3 billion in free cash flow. That figure has increased every year since, reaching $10.7 billion in 2023. This free cash flow supports its large dividend. Importantly, the dividend is covered by just 60% of the company’s free cash flow, so it has plenty of excess cash to buy back stock, pay down debt, and launch new products in new regions.

Right now, to generate about $1,000 in annual income from British American Tobacco stock, you’d need to invest roughly $10,500. To produce about $1,000 in monthly income, you’d need to invest around $126,000. When it comes to generating large and reliable dividends, few stocks are as attractive as British American Tobacco.

Should you invest $1,000 in British American Tobacco right now?

Before you buy stock in British American Tobacco, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and British American Tobacco wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $740,688!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of June 3, 2024

Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool recommends British American Tobacco P.l.c. and recommends the following options: long January 2026 $40 calls on British American Tobacco and short January 2026 $40 puts on British American Tobacco. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



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