British American Tobacco (BTI)

Pays a 9.5% dividend, so over 10 years, you've returned 95% of your capital, assuming no dividend cut. But there is a huge ESG overhang in this sector; everybody hates tobacco stocks. Debt is paid down and the balance sheet is fine, so there's no real risk. The company is transitioning away from burning cigarettes.

Not a "loved" company from a ESG perspective. Question is whether 10% divided yield is sustainable (thinks that it is). Debt levels ok. Believes company will perform well over the long term. Good for dividend oriented investors (good bond proxy). Owns shares and will continue to hold. 

Share price has under performed the past 10 years. 9% yield very attractive. Good for foreign income investors. Does not invest in sector due to growth prospects. 

Tobacco has done well in the past. These companies boast high free cash flow and dividends. Their sector has been consolidating. You can own this for the yield. He doesn't look at tobacco companies, because of the environment we're in. At current levels, it's not bad to own.

A clear mean-reversion trade. Historically, it traded between 4.4-6.8. With its 9% yield, you only have to wait 8 years, and then every dollar earned is playing with the house's money. In a recession, income is a scarce commodity. Probably a buyback next year. Transitioning to consumables. You may not like its product, but it's good downside protection. Yield is 9.14%.

Big dividend payer and big free cashflow. Declining used of tobacco in the developed world, less so elsewhere. Hard to get excited about it, but he acknowledges the big dividend if you want it. Yield is almost 9%.

(A Top Pick May 20/22, Down 12%)

Good debt levels. Pays an 8% dividend yield, so over 5 years you will collect 40%. If you've owned this for 10-15 years, you've done very well.