This dividend stock that yields almost 10% is going to change my life, accelerating my FIRE journey to a new level of velocity. Learn about the flow of money and dividends in my portfolio, and how I approach the dividend game. I'm excited to review my strategy and also take a look at British American (BTI) stock.
#dividend #stock #investing
0:00 I just bought British American (BTI), a dividend stock yielding almost 10%.
0:15 Putting money in a stock that yields 10% is really exciting. The cash flow is massive.
0:22 I bought a lot of Altria (MO) in late 2023, and that stock has worked really well for me.
1:02 THE FLOW OF DIVIDENDS
1:20 In my OG days, I started mostly with sin stocks.
1:39 Check out the pinned comment for a link to my Patreon.
2:08 There are many different ways to play the dividend stock investing game.
2:29 Right now, I need more cash flow NOW.
2:42 Three-Tier Flow of Money
3:15 9.5% dividend yield and a PE ratio in the 6s.
3:20 STEP 1: Capital To Deploy
3:23 STEP 2: Put the capital in a higher-yielding, annuity-like stock.
4:22 STEP 3: Use the dividends from Step 2 to fund "forever" ("Core") investments like SCHD, JNJ, and SBUX.
5:05 I have a tranche of Treasury Notes maturing. It was earmarked for SCHD, but I think I'll just put it in BTI.
5:30 KEY: Don't worry about what people think, nor how they perceive you as a dividend investor.
6:46 KEY: Step 2 investments are also "forever" companies. I don't sell them. They are just a different type of investment. They have higher risk.
7:38 Pros and Cons - Option 1 is "sleep-well-at-night", but Option 2 carries more risk (with FIRE coming quicker).
8:00 MY BTI DIVIDEND STOCK PURCHASE LAST WEEK
8:44 The forward PE is in the 6s.
9:13 Starting yield is 9.86%.
9:34 SLIDES FROM BTI INVESTOR WEBSITE
10:05 NOTE: I take out dividends from sin stocks. I generally don't reinvest them back into the company that paid the dividend.
10:28 SLIDE 1: US Combustible Brand Write-Off
11:11 Non-cash impairment charge.
12:14 SLIDE 2: Balance Sheet
12:31 You can see intangible assets tank, due to the write-off of the US brands (combustible market).
13:01 SLIDE 3: Income Statement
13:19 Depreciation, Amortization, and Impairment Costs
14:10 SLIDE 4: Free Cash Flow (It's Growing Really Well!)
14:55 The business is growing from a financial standpoint.
15:27 Adjusted results are growing (adjusted for the impairment charge). Adjusted diluted EPS is up 4% year-over-year.
16:08 Is this really a step 2 stock, or is it a step 3 stock on deep discount?
16:20 Broader society may hate this stock (and want it to go out of business), but the fundamentals show it's doing just fine.
16:56 SLIDE 5: New categories are growing FAST (28% CAGR)
17:40 SLIDE 7: 16% of revenue comes from smokeless!
18:22 The sin stocks trade at low values because people hate them and avoid investing in them.
18:39 A lot of mutual funds cannot even buy these stocks.
19:52 DISCLAIMER AND DISCLOSURE
DISCLOSURE: I am long British American (BTI), Altria (MO), Johnson & Johnson (JNJ), Starbucks (SBUX), and SCHD. I own these stocks (and ETF) in my personal dividend stock portfolio. I'm also long Treasuries.
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