This Sin Stock's Dividend Yield Is About to Hit 10%: Time to Buy?
Central bank interest rates have risen significantly in the last few years. This has led to banks and financial institutions offering close to 5% in annual interest payments -- sometimes even higher -- on consumer savings accounts versus close to 0% a few years ago. As long as you fall within the guidelines, these accounts offer federally insured and, therefore, riskless interest payments to savers looking to build for retirement.
For dividend investors, this raises the hurdle of an attractive dividend stock. Why buy a stock yielding 2% with little dividend growth when you can get a 5% return without taking any business risk? dividend stocks need to either have an attractively growing dividend, a high dividend yield, or both to beat the basic savings account these days.
One stock that has fallen recently is British American Tobacco (NYSE: BTI). The tobacco giant and sin stock conglomerate now has a dividend yield approaching 10%, which looks attractive even in the face of a 5% risk-free interest rate. Is now the time to take the leap and buy some shares?
Source Fool.com
