British American Tobacco Dividend History 2005 onwards

Based on British American Tobacco dividend history 2005 onwards we can show you why we believe that from an income investing perspective British American Tobacco is an ideal candidate.

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Comparing British American Tobacco with Imperial Tobacco

British American Tobacco - an example company!

Suppose you bought 1000 shares in British American Tobacco during May 2005. The group's share price fluctuated during that month between £9.78 and £10.57. Lets pick a date, say May 11th, when the closing share price was: £10.25 Excluding stockbroker commissions and any taxes, you therefore paid a total of £10,250.

Click here for a write up on holding British American Tobacco shares as from May 1999.

Year ended	Interim	Final	Total	Growth %
31 December	Dividend	Dividend	Dividend

2010	33.2
2009	27.9	71.6	99.5	18.9%
2008	22.1	61.6	83.7	26.4%
2007	18.6	47.6	66.2	18.4%
2006	15.7	40.2	55.9	18.9%
2005	14.0	33.0	47.0

Let's first check the dividend yield for 2005?

You would have received a dividend of 47.0 pence per share for 2005. Now, divide your dividend of £0.47 a share by your original purchase price of £10.25 and multiply with 100 and your (prospective) dividend yield at the time amounted to almost 4.6 per cent. Not bad.

Since, according to the British American Tobacco dividend history 2005 onwards table, the Group has been paying a dividend consistently for the last five years - in fact:

BAT has increased it's dividend by an average of
19.0 per cent every year!

And what's happened with your dividend pay-out?

Based on the British American Tobacco dividend history 2005 onwards table we can calculate that by:

2009 the dividend payout has more than doubled from £0.47 for 2005 to £0.995 for 2009

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What has happened with your an annual yield based on your initial purchase price?

You bought British American Tobacco shares in May 2005, paying £10.25 a share. Almost six years later, you’re receiving a total dividend payment amounting to £0.995 a share. Again, divide that £0.995 a share by your original purchase price of £10.25 and multiply with 100:

Your effective yield is now 9.7 per cent!

As long as British American Tobacco keeps boosting its dividend, and you keep holding the shares, there is no limit to how high your effective yield can go.

And what about BAT's capital appreciation?

As per the British American Tobacco dividend history 2005 onwards table BAT have increased their dividends each year, however it has also increased in value over time.

Remember 2005, in our example above, when we were able to purchase BAT shares at £10.25?

British American Tobacco share price has been a steady riser ever since. During 2010, BAT's shares where trading in £19.50 - £23.50 range.

BAT's value has (more than) Doubled since 2005!

Let me summarise this for you:

if you had purchased 1000 BAT's shares over five years ago, at a cost of £10.25 per share, your overall cost would have been £10,250 (excluding purchase costs)
on average BAT's dividend has risen 19.0 per cent per annum, almost Doubling in amount from the 47 pence in 2005 to almost a pound per share for 2009
whilst the share price has (more than) doubled from £10.25 at purchase to between £19.50 - £23.50 per share during 2010.

After almost six years of holding your British American Tobacco shareholding of 1000 shares:

your shares are now worth approx £22.50 per share
your total shareholding is now worth approx £22,500
you have received dividends totalling £3,523
for 2009, you have received an annual gross dividend payment of £0.96 per share, totalling £960
providing you with an effective dividend yield of 9.7 per cent.

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What else can I say?

Accelerating Annualised Dividend Growth Rate!

Before we consider the sustainability of British American Tobacco's dividend and its growth prospects, it's a good idea to first consider what's happened so far.

10-year	5-year	3-year
Annualised	Annualised	Annualised
Growth Rate	Growth Rate	Growth Rate
14.4%	19.0%	21.2%

Over the last ten, five and three years British American Tobacco's annualised dividend growth rate has steadily accelerated which is fine going forward, but only as long as the group's:

earnings per share annualised growth rate increases as well (which it has done in the past, in comparison to the annualised dividend growth, albeit at a lower rate)
pay-out ratio remains at least the same (the company's stated dividend policy is to pay out at least 65 per cent of its earnings as dividends, which it has done during the last few years), or, indeed increases it even further
dividend cover does not deteriorate too fast (which it hasn't, so far)

We believe, barring unforseen circumstances, that the dividend is unlikely to be cut anytime soon. Instead, further increases are likely.

Therefore, if British American Tobacco continues to increase the dividend payout by (a conservative?) 10% each year, your annual yield on investment of 9.7% will grow to 10.7% (£1,094) and the following year to 11.7% (£1,204), etc.

Share your views on British American Tobacco.

What About BAT's Dividend Growth Rates?

I would like to refer to Todd Wenning's excellent write up regarding the sustainability of British American Tobacco's dividend and growth prospects.

Be notified when we have updated British American Tobacco's dividend prospects. Subscribe to our free Dividend Alerts service.

Click here for a write up on holding British American Tobacco shares as from May 1999.

Return to British American Tobacco for more recent information on their dividend policy.

Return to Dividend Risers for information on other companies with an amended dividend policy.

WE WOULD LIKE TO POINT OUT, THAT:

1.√the above mentioned Dividend History table is solely an example of a UK listed company's dividend history and is not to be construed as a share recommendation. Neither Early Retirement Investor nor EMAR Publishing are registered as an investment advisor or as an independent financial advisor and do not provide individualised advice

2.√the price of shares and investments and the income derived from them can go down as well as up, and investors may not get back the amount they invested

3.√where the information consists of pricing or performance data, the data contained therein has been obtained from company reports, financial reporting services, periodicals, and other sources believed reliable

4.√data computations are not guaranteed by Early Retirement Investor.com or any of the data providers and may not be complete.

5.√The editor or contributors may have an interest in the share mentioned.

6.√Dividend yields move up and down. As a company’s share price increases the dividend yield falls. And vice versa: if the share price falls the dividend yield increases.

Click here for a write up on holding British American Tobacco shares as from May 1999.

Return to Rising Dividends for announcements from other companies with an amended dividend policy.

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