 Dividend Ratio Return
To understand DRR on capital investment and the return over a period to illustrate-
I did a bit of number analysis on British American Tobacco period 3 May 2019 through to 2023
British American Tobacco (BATS) based on an Investment of £200,000 in 2019 over a 4-year period on share price and dividend re-investment model. It will show how you would not lose money on your original investment.
Investment Model £200,000 Investment buys at the price of £28.97 which gives 6903 shares
Dividend 50.75p per share for each quarter Total of 203.00 for the year
Each quarter would pay £3,503 in Dividend reinvested would add 123 shares to 6,903 giving a new total of 7,026.
The new DRR now be 200,000 divided by 7026 £ 28.46 per share.
Stamp Duty was included on the trades at 0.5% with Free trade on the Dividend Reinvested.
I used this model with a Medium return on 123 shares per quarter over 4 years. I could give you the monthly yearly breakdown on each quarter number of shares reinvested and so on. I widened the perimeters on larger Investments of £500,000 and the time frame from 2018 to 2023. The results were similar so I kept to a medium model on the example I worked on.
The return over 4 years on £200,000 on the return on share would range from £19.47 to £22.45 per share on 26 March 2024. The range on shares was between 8,590 to 9,600 shares after 4 years.
It is just an Illustration showing the case in America where people have brought a Class Action they lost money. They lost when they sold not if they kept their Investment.
I did consider people just being paid the Dividend quarterly hence I kept to 123 shares. The money they receive works in a similar way to Reinvestment. They would not lose money on the model above.
I hope this helps
Happy Investing |
Recent chart says lower lows which could be positive. Plus ITC sale will be done again to reduce debt and also buying back shares. |
Car1pet: A bit more about cup and handle formations. I'm by no means an expert on charts but I do look for one or two patterns. Cup and handle is a bit of an odd bird as it can pop up over either short or long timeframes (even years). If you look at the 3 month chart here after last nights close you can see the shape of the cup. As the theory has it, if the share price turns down a little next week but then goes up again a handle will have formed. This is considered a bull signal because of the particular pattern of price movements needed to produce the shape. Anyway, it still might not happen and every rule is made to be broken! In this case we're looking at a short period pattern so we'll have the answer soon enough. Perhaps not something to get overly excited about but at least it's another potential positive supporting a BAT share price recovery story. |
Sorry Car1pet meant right not left. |
I don't much notice of charts, never heard of a rich chartist, but to be fair it's one tool to analyse a share, it's like playing golf you just don't play with just a putter, there's 13 other clubs. |
ygor705 I'm not knowledgeable about cups and handles. I've done the 3 month view but cant see anything resembling a cup or a handle. When you say a handle on the left hand side of the chart that is in the past so how can it be formed.
I'd appreciate your wise words to help me understand the cup and handle and what it means. Thnaks |
Could be a cup and handle formation developing here - most noticeable on the 3 month chart. Worth watching and a bull signal if a handle develops on the left hand side of the chart. |
hold above 2400 today? |
Agree, these buybacks go on until end 2025p, if I read it right all being well I see back over 3000p by then, collect the dividends every 13 weeks on the way. |
Just doing some digging on the itc hotels demerger which seems to imply the demerger ratio of shares will be 10:1. Now looking back at the 2023 full year presentation Mr Marroco stated Bat had no strategic intent of being a shareholder in a Indian hotel. So anybody know how many shares Bats will hold in the floated business? |
i wish i was able to purchase 300,000 shares just like bat did yesterday.....and at these bombed out prices. Patience and we will come good |
Good news. |
Fitch Upgrades British American Tobacco to 'BBB+'; Outlook Stable
Tue 26 Mar, 2024 - 11:22 ET
Fitch Ratings - London - 26 Mar 2024: Fitch Ratings has upgraded British American Tobacco plc's (BAT) Long-Term Issuer Default Rating (IDR) and senior unsecured ratings to 'BBB+' from 'BBB', and perpetual subordinated notes rating to 'BBB-' from 'BB+'. The Outlook on the IDR is Stable. We have also affirmed the short-term rating at 'F2'.
The upgrades reflect BAT's improved leverage metrics, and our expectation of further deleveraging supported by the recent tightening of BAT's leverage target corridor, as well as improved profitability and strong free cash flow (FCF) generation.
The ratings remain underpinned by BAT's strong business risk profile as one of the largest global tobacco companies in a fairly consolidated sector, with wide regional and brand diversification. BAT's credit profile is also supported by a broad next-generation products (NGP) portfolio, which achieved profitability in 2023 ahead of our expectation, and by exposure to a wide range of mature, cash-generating and emerging markets offering good growth potential.
www.fitchratings.com/research/corporate-finance/fitch-upgrades-british-american-tobacco-to-bbb-outlook-stable-26-03-2024 |
Fitch upgrade issued |
Not just the bull traders monty. BATS themselves will be causing the share price to rise (they hope) with their BB using our money. They could have at least waited a couple of weeks. |
Problem is bull traders know that when the new financial years starts U.K. there are buyers for high yielding stock especially now BOE England rates will fall possibly June.They will catch the new ISA boys and other products including me. We will be paying over 2400p I reckon. |
I hope this stays down for a bit longer personally. |
#MCunliffe1, I have been a buyer since before Xmas, building a position taking advantage of the weak share price since the asset value write down update, like most invested here for the dividend income and then keep them for a decade or more, I expected the BB and will keep adding over 2024 or until I hit my target holding, the ISA allowance coming on 06.04.2024 might accelerate the process, sooner or later I also expect some MnA with IMB and am positioning for that event should it happen with IMB already covered off during 2020/2021.. :o)
235 pence income this year for starters, 10 year breakeven on capital invested but compound DRIP will see that in 7 years, and the BB will be ongoing up to FY2025, BATS will still own 25% of ITC too.. |
I do an annual 10% increase in my total holding every year from my divi income. So will be adding here & IMB in MAY when the heavy divis arrives in my ISA account. Agree, these are cheap for long term income with your capital repaid in 7 years. The improving inflation and interest rate reduction should help UK PLC catch up on share price to ROW.. GLA |
LLB: If YOU hope to jump in at the start of the new ISA year why didn't management at BATS hold off on the share BB until April 6th?
Heck, if enough of you buy just after 6th April your purchases may have a lifting effect (on the SP) greater than that we've seen already given the amount of our money they have spent. |
Agree 100% here. |
If the share price drifts through to April 06th, even better, only a few more trading days to go.. :o) |
Get em in early while it's cheap. |
While there are ~250 trading days per year the reality is there are some very quiet weeks over Christmas, Easter, Summer etc where liquidity doesn't allow an even pace... as a result I would argue they are broadly on track... That said there is a valid argument for front loading it to some extent given the forecast/guided earnings growth and current depressed valuation... |
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