Image source: Getty Images <\/p>\n
In 2025, the full UK State Pension currently sits at \u00a3230.25 a week, adding up to \u00a311,975 a year. Yet by investing in high-yield income opportunities, the same amount can be earned by investors who haven\u2019t yet reached the minimum age required to claim the State Pension.<\/p>\n
In fact, at its current impressive yield of 6.3%, a total of 4,985 British American Tobacco<\/strong> (LSE:BATS) shares can offer the same passive income to any investor who has the cash. So how much money do investors need to start earning this passive income today? And is British American Tobacco actually a smart investment?<\/p>\n For years, the popularity of British American Tobacco among income investors hasn\u2019t waned. While this sin stock doesn\u2019t get much love from ESG investors, the addictive nature of its products makes for some nice pricing power. And that\u2019s ultimately translated into a consistent high-yield payout.<\/p>\n At a price of 3,792p per share, snapping up 4,985 shares today will set an investor back just over \u00a3189,000. Obviously, that\u2019s not pocket change. Luckily, even those of more modest means can still build to this sizable position over time.<\/p>\n Assuming the tobacco stock maintains its 6.3% payout moving forward, investing \u00a3500 each month at this rate of return would build a \u00a3189,000 portfolio in about 17 years. And when factoring in the extra potential return from capital gains, this timeline only gets shorter.<\/p>\n Of course, we\u2019re making a big assumption that dividends will continue to flow. The group\u2019s long track record of consistently hiking its payout certainly gives an impression of sustainability. But with the smoking landscape shifting, can this hiking streak truly continue?<\/p>\n As consumer health awareness increases, the number of smokers in key markets like the UK and US are steadily declining \u2013 a trend that\u2019s only being accelerated by increasingly strict regulation. However, management isn\u2019t blind to this threat and has been diversifying the business into healthier categories with products like nicotine pouches and electronic cigarettes.<\/p>\n So far, this foray into new categories seems to be off to a good start. Its Velo brand has already captured 7.9% of the US market, with Vuse becoming the biggest vaping brand in the US, Canada, France, the UK, and Germany.<\/p>\n Despite this encouraging progress, there\u2019s still a big question mark about whether these new products will be able to replace the revenue and earnings of its traditional tobacco products. Illicit single-use vapes have already created new growth challenges in North America. And with consumers showing far less brand loyalty among its new product categories versus cigarettes, it\u2019s not clear whether British American Tobacco\u2019s pricing power will continue.<\/p>\n This evolving tobacco enterprise presents an interesting defensive income opportunity with some transformation potential. But it also carries significant execution and regulatory risks. And if management isn\u2019t able to overcome these challenges, then the group\u2019s long-term income prospects could become compromised.<\/p>\n British American Tobacco could still have a valuable role to play for investors seeking to replicate the State Pension and is worth further research. However, personally, I would be actively considering ways to diversify the risks with other high-yield opportunities, just in case the company falls short of expectations.<\/p>\n The post 4,985 shares of this FTSE dividend star pay an income equal to the State Pension!<\/a> appeared first on The Motley Fool UK<\/a>.<\/p>\n More reading<\/strong><\/p>\n Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has recommended British American Tobacco P.l.c. 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.<\/a><\/p>\n Motley Fool UK 2025<\/p>\n","protected":false},"excerpt":{"rendered":"Image source: Getty Images In 2025, the full UK State Pension currently sits at \u00a3230.25 a week, adding…\n","protected":false},"author":2,"featured_media":275891,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3093],"tags":[104195,51,474,104196,16220,19536,2499,1786,16,15],"class_list":{"0":"post-275890","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-british-american-tobacco","9":"tag-business","10":"tag-finance","11":"tag-income-opportunities","12":"tag-investors","13":"tag-passive-income","14":"tag-personal-finance","15":"tag-state-pension","16":"tag-uk","17":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/114882376356402609","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/275890","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=275890"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/275890\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/275891"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=275890"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=275890"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=275890"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}