Passive income has become a popular topic of discussion in recent years, as more individuals seek financial stability beyond traditional full-time jobs. One common way to generate passive income is through investing in dividend-paying stocks. These stocks offer a reliable way to earn money without the need for constant active involvement. In a recent article, we compiled a list of the 10 Best Stocks to Invest in for Passive Income, and in this piece, we will take a closer look at where British American Tobacco p.l.c. (NYSE:BTI) stands among these top stocks.
Passive income is money earned with little to no ongoing effort, allowing individuals to generate earnings while focusing on other aspects of life. This type of income is particularly appealing as it provides financial stability and flexibility, allowing individuals to diversify their income streams. According to a 2024 Financial Wellness Survey by First National Bank of Omaha, 53% of Americans now have at least one passive income source, highlighting the growing trend in this area.
Investing in dividend-paying stocks is a popular way to generate passive income, as these investments have a proven track record of delivering solid returns over time. Dividend income has steadily increased over the years, with dividends accounting for more than one-third of the total returns from the broader market since 1936. Companies like British American Tobacco p.l.c. (NYSE:BTI) offer attractive dividend yields, making them an appealing option for investors looking to build a passive income stream.
British American Tobacco p.l.c. (NYSE:BTI) is a manufacturing company based in London that specializes in cigarettes, tobacco, and nicotine products. The company has seen accelerated growth in recent years, driven by innovations in its New Categories segment and strategic investments in US commercial initiatives. Despite regulatory and fiscal challenges in certain markets, the company remains confident in its ability to achieve its mid-term targets of revenue and profit growth by 2026.
As of February 24, British American Tobacco p.l.c. (NYSE:BTI) pays a quarterly dividend of $0.7431 per share, with a dividend yield of 7.87%. The company has a strong track record of cash flow generation, consistently achieving high operating cash conversion rates. In 2024, the company generated £7.9 billion in free cash flow before dividends and returned £28 billion to shareholders over the past five years through dividends and share buybacks.
Overall, British American Tobacco p.l.c. (NYSE:BTI) ranks 10th on our list of the best stocks to buy for passive income. While the company offers a solid dividend yield and growth potential, there may be other stocks in the AI sector that hold greater promise for delivering higher returns in a shorter time frame. Investors looking for alternative options may want to explore the AI sector for potential opportunities.
In conclusion, passive income is a valuable source of earnings that can provide financial stability and flexibility. Investing in dividend-paying stocks like British American Tobacco p.l.c. (NYSE:BTI) can be a reliable way to generate passive income over time. By diversifying their portfolios and exploring different investment opportunities, investors can build a sustainable income stream for the future.
