Tobacco industry has been battered during the last four years and this is to attribute to two main factors. The first has to do with the general sanctions that China has suffered in the context of the trade war with America and in which sanctions the american tobacco industry has great exposure. It also has to do with the trend of our times towards a healthier lifestyle. The second factor is the most important, because if this is valid, the sector will enter a new era. If not, then there might be a good opportunity, which could unfold in the next period of time and we will keep an eye on it.
British American Tobacco (BTI US) share moves stabilizingly since the beginning of 2019, while the tobacco industry index of S&P 500 soared about 36% from March’s lows and is now once more in a resistance test against the strongly falling channel. An upward breakout of the channel will lead BTI share to a new upward move, which could be attractive. The share also provides a dividend yield of 7,66% at these levels and attracts investors that seek income through their positionings. And according to estimations so far, dividend yield is expected to rise 5,5% for 2020.
According to S&P 500 Tobacco Index’s statistical behavioral analysis, since 1990 until today, every time that the index rises at least 35% above a significant level, in the next semester it outbeats S&P 500, with an average return of 19%.