Cheap dividend stocks with double-digit free cash flow returns: BritAmerican Tobacco & Lufthansa in focus

Cheap dividend stocks with double-digit free cash flow returns: BritAmerican Tobacco & Lufthansa in focus

According to a report by www.aktienwelt360.de,

Dividend investors are always looking for stocks that are not only attractively priced but also offer solid dividend yields. Two companies that particularly stand out in this context are British American Tobacco and Lufthansa. Not only do these two stocks offer impressive returns, but they have also recently posted double-digit free cash flow returns, which could make them extremely attractive to investors.

British American Tobacco:

With an expected dividend yield of over 9%, British American Tobacco is one of the few dividend aristocrats in Europe. The strong dividend yield is primarily due to the critical business model, which, however, also entails risks, such as volumes or regulations that have been declining for years. Nevertheless, the company was able to record an increase in sales in the first half of 2023 and demonstrate impressive growth rates, particularly in future business with risk-reduced alternatives. The recent double-digit free cash flow return of over 14% makes the stock particularly attractive for investors, although the high debt from the Reynolds takeover in 2017 should be kept in mind.

Lufthansa:

German airline Lufthansa has suffered from the COVID-19 pandemic but is now showing recovered demand. Adjusted free cash flow was around EUR 2.5 billion in the last financial year of 2022, which corresponds to a double-digit free cash flow return of over 26%. Despite strong fluctuations in free cash flow, the future forecast looks positive and points to a gradual normalization of air traffic volumes and increasing demand. The targeted adjusted EBIT margin of at least 8% shows that Lufthansa not only wants to increase sales, but also improve operational efficiency.

Despite the positive outlook for these top dividend stocks, investors should keep an eye on the risks and continue to closely monitor developments in their respective industries and companies. The impact on the market could be diverse and depends on various factors such as competitive pressure, regulations and market developments.