I’d buy this high-quality FTSE 100 stock paying a big dividend

first_imgI’d buy this high-quality FTSE 100 stock paying a big dividend Kevin Godbold has no position in any share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Kevin Godbold | Monday, 23rd March, 2020 | More on: BATS Simply click below to discover how you can take advantage of this. Image source: Getty Images. I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. See all posts by Kevin Godbold Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee.center_img Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Our 6 ‘Best Buys Now’ Shares I’ve skimmed through the full-year results report released on 27 February by high-quality FTSE 100 stock British American Tobacco (LSE: BATS) but can find no mention of coronavirus.My assumption is that the pandemic may have a negligible direct effect on trading for the company. Overall, products for smokers tend to experience rock-solid demand in the sector, and people rarely forego their smokes or equivalents, even in the leanest of economic times.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Impressive trading and financial recordThat’s why BATS’ record of growth in revenue, earnings cash flow and shareholder dividends is generally steady.However, there are risks, and the report’s ‘Risks and Uncertainties’ section fleshes them out. Things such as competition from illicit trade; disruption because of legislation; the firm’s potential inability to deliver on its New Categories strategy; market-size reduction; litigation; geopolitical tensions; disputed taxes, interest and penalties; changes in the tax regime; foreign exchange rate exposure and other things.It’s a long list, and underline’s that there’s no such thing as a risk-free share. Even great big, cash-generating, defensive FTSE 100 shares like this one can plunge a long way when things go wrong. Although just recently, you hardly need me to remind you of that!A positive outlookMeanwhile, the outlook statement for 2020 reveals the company anticipates global industry cigarette and tobacco heating products (THP) volumes will fall by around 4%. Within that figure, the directors assume that US industry volume will fall by about 5%. Indeed, the backdrop has been one of declining volumes in the sector for years, yet BATS has powered ahead, using its cash flow to fuel returns for shareholders.The firm expects currency-adjusted revenue to grow between 3% and 5% during 2020. And that’s the type of outcome we’ve become used to from BATS. On top of that, the directors expect “continued operating margin improvement.” And there will be an ongoing drive to grow the New Categories division, which should produce £5bn in revenue by 2023 or 2024 if the company meets its targets.The pandemic scare affecting the stockOverall, the directors said in the report the business is “performing well” and we can expect another year of “high single figure constant currency adjusted EPS growth,” and strong operating cash flow conversion “in excess of” 90%. But there’ll likely be a 4% headwind on full-year adjusted earnings per share growth because of foreign exchange movements. Maybe. We’ll see. Most markets have been all over the place lately!Meanwhile, at the recent share price near 2,540p (and falling as I write), the stock is almost 30% down from its position in early February. At this level, the forward-looking dividend yield for 2021 is just above 9%.BATS is near the top of my watch list. But I never buy any share when it is obviously still falling, no matter how attractive the value indicators, or how enthusiastic I am about the firm’s prospects. One possibility of which I’m mindful is that the tobacco sector could be dumped by investors altogether, rather like the oil sector appears to have been. For me, it’s ‘wait and see’ for the time being. “This Stock Could Be Like Buying Amazon in 1997” I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Enter Your Email Addresslast_img read more