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An 8% FTSE 100 dividend stock I’d buy to top up my pension

first_imgSimply click below to discover how you can take advantage of this. Alan Oscroft has no position in any of the shares 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. Image source: Getty Images Our 6 ‘Best Buys Now’ Shares 5 Stocks For Trying To Build Wealth After 50 An 8% FTSE 100 dividend stock I’d buy to top up my pension Alan Oscroft | Wednesday, 9th December, 2020 | More on: BATS Markets around the world are reeling from the coronavirus pandemic…And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.center_img Click here to claim your free copy of this special investing report now! 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. Enter Your Email Address See all posts by Alan Oscroft 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. Some might have ethical objections to the tobacco industry. But from an investing perspective, I find it hard to fault British American Tobacco (LSE: BATS). I’d even rate it one of my top FTSE 100 stock picks for a long-term pension plan. The company has been offering a reliable progressive dividend for years, and forecasts currently indicate yields around the 8% mark.A pre-close update Wednesday spoke of the firm’s strategic priorities. The key seems to be growing its share of what it calls ‘New Categories’. That’s products that don’t involve combustible tobacco, thus reducing the associated health risks. BATS says the first half has seen continuing strong growth in that market. And it sounds like the strength is extending into the second half too.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…The bulk of profit is still coming from cigarettes though, and that’s holding up well. We are in the midst of a global reduction in smoking, but it looks softer than previously thought. The global volume of cigarettes and similar products is now expected to decline by a relatively moderate 5% this year. The industry had earlier been expecting a drop of 7%.Weak market reactionThe BATS share price trailed the rest of the FTSE 100 in early trading, though it did come back fairly quickly. But on a morning when most of the Footsie is green with very few shares in the red, it’s a little disappointing. It’s in spite of the company’s reiteration of its earlier guidance too. Adjusted revenue growth, at constant currency, should be at the high end of the 1-3% range. And we should see mid-single figure adjusted EPS growth.The biggest downside for me is debt. British American is working to get its net debt to EBITDA multiple down, which is a good thing. But its target is a fairly high 3x. That’s around twice my rule-of-thumb comfort level. I can handle worse than that for a company with a clear view of future income, but I’m still a bit twitchy.Maybe the most important snippet from a pension viewpoint concerns the BATS dividend. The company has confirmed a “dividend payout ratio of 65% of adjusted diluted EPS and growth in sterling terms, supported by a strong liquidity position.” Hopefully, that strong liquidity position will also help towards getting debts down further.FTSE 100 for pensionsWhen it comes to providing for my retirement, I rate FTSE 100 dividends above all else. And those buying now could be locking in a healthy income stream, thanks to the market turning against tobacco shares.The British American Tobacco share price is down 10% in 2020, though the Covid-19 impact on the firm looks fairly minimal. Over the past five years, the negativity is more apparent. BATS shares are down 20% on a timescale that’s seen the FTSE 100 gain 11%.We’re looking at P/E multiples of only around eight now. I think that seriously undervalues the long-term income stream coming from BATS. Smoking tobacco might be slowly losing its popularity. But with alternatives growing nicely, I think the long-term future for tobacco will be cash rich. And that’s exactly what I want from a FTSE 100 pension investment.last_img read more