10-02-2021, 01:53 PM
(10-02-2021, 01:19 PM)crimsonghost747 Wrote:I'm bored so I will pile on some more.(10-02-2021, 09:52 AM)Kerim Wrote: I guess what I'd really like to kick around in this thread is whether BTI is a yield trap.
Yes.
Can I close this thread now?
No but in all seriousness, I haven't even looked at these companies in years so I'm a bit out of touch with their current financials etc. So I can't really comment on any of the numbers apart from agreeing that the dividend is super nice and that if the payout ratio is relatively low over the past several years then it's quite likely that they can keep paying it for the next several years.
But the thing here is that what is the investment thesis when it comes to the business model? Because in my view their business model is dying. It's not a sudden stop, it's a slow bleed caused by changes in what is being considered cool, the increase in financial awareness, increase in ESG awareness, regulatory issues, the rise of alternatives which are superior in many ways.
There is also a HUGE shift to "trying out new and different things". Compare, well almost anything, to 20 years ago. People are not buying the same old stuff, they want something new. Beer? It's not budweiser, it's some fancy IPA. Or worse yet, one of those horrible seltzer things. Hotel? It's probably not Marriott, it might be an airbnb in an igloo. Vacation? All inclusive hotel package at a beach resort? Nah it'll be a bit more exotic. Fruit? Oranges... nah let's go for avocado and passion fruit. I guess you see where I'm going with this: smoking? It won't be Lucky Strike, it'll be a fancy flavor thing, a real cuban cigar, some quality snuss, or another thing that we haven't heard of yet. This is a trend that will keep intensifying.
Looking purely at the business model and disregarding the financial info, what is the reason you want to invest in tobacco companies? Will smoking be cool again? Will they finally be able to succeed in this alternative game that they have been failing to do for over a decade? What is the reason that will make these companies successful in the next decade or two?
The dividend is nice. But if these companies can't turn things around then you will probably match their performance if you put $1000 in a jar and take out $20 every quarter.
There is considerable validity to what Crimson shared. I started a 401K for my daughter a few months ago. Sent her an email and told her I wanted some input since it was her money. She responded with a list of random thoughts.
Nothing that is polluting the world. Oil and ocean plastic pollution.
No tobacco, seen it kill too many relatives, but weed is OK if it might make money.
Does AirBNB have stock?
Something involving animals or pets would be good. Absolutely no food companies mistreating livestock. Very against that.
23yr old that doesn't know what a dividend or ESG even is but she and her friends are onboard with Crimson's thoughts. They consciously avoid supporting things they are opposed to.