Will British American Tobacco (BTI) Help You Retire Rich?

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For U.S. investors, the idea of escaping negative American attitudes toward tobacco seems extremely inviting. U.S. giants Altria Group Inc (NYSE:MO) and Reynolds American, Inc. (NYSE:RAI) have had to announce layoffs in response to falling domestic demand for cigarettes and other tobacco products, as anti-smoking actions from the FDA and the Centers for Disease Control appear to be having an impact among customers.

But the overseas environment is also moving against British American Tobacco and its peers. In Australia, British American and Philip Morris International Inc. (NYSE:PM) have had to deal with proposals to limit the use of logos and graphics on cigarette packs, instead requiring uniform box designs with large warnings and pictures showing the impact of diseases that have been linked to smoking. Other countries, such as New Zealand, Canada, India, and the U.K., are watching to see what happens to the Australian proposal, raising the possibility that it could become a testing ground for further worldwide regulatory efforts.

For retirees and other conservative investors, British American Tobacco’s yield and history of dividend growth look reasonably comparable to what you’d expect from a tobacco stock. Given the rising threat level overseas for tobacco companies and a fairly high valuation, however, now may not be the best time for retirement investors to add British American Tobacco to their portfolios.

The article Will British American Tobacco Help You Retire Rich? originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of Philip Morris International.

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