British American Tobacco (LSE:BATS) has spent years arguing that it can keep paying chunky dividends while quietly rebuilding itself around products that do not involve burning tobacco. The 2025 full-year numbers, published in February 2026, are the cleanest read yet on whether that bet is starting to pay off, and the share price reaction so far has reflected cautious optimism rather than euphoria. For UK income investors and long-term FTSE 100 holders, this is a stock that sits at the intersection of regulation, technology and Capital returns.

The broader question is whether smokeless can grow fast enough to offset structural declines in combustibles before regulatory or competitive pressures intensify. The 2025 results, the £1.3 billion buyback for 2026 and the reaffirmed full-year guidance together offer the clearest evidence yet of how management sees that balance evolving. Below, we walk through what the latest disclosures show, where the share price sits, and the key risks UK investors may want to keep on their radar.

Key takeaways

  • BAT published its 2025 preliminary results on 12 February 2026 under the banner Momentum Drives Further Confidence in 2026 Delivery, according to the company.
  • Smokeless products now represent 18.2% of group Revenue, up around 70 basis points versus FY24, as last reported.
  • The company has committed to a £1.3 billion share buyback for 2026, alongside its progressive Dividend.
  • BAT has reaffirmed 2026 guidance for constant-currency revenue growth at the lower end of the 3% to 5% range, according to company updates.
  • Smokeless consumer numbers grew by 4.7 million in 2025 to 34.1 million, as last reported by the company.
  • Profit attributable to shareholders for 2025 was £7.00 billion, up from £5.34 billion in 2024, according to BAT s preliminary results.

Why investors are watching this FTSE 100 stock

Investors are watching British American Tobacco because it is one of the largest dividend payers in the FTSE 100 and because the strategic question over its future is finally being answered, slowly, in the income statement. The headline reason is straightforward: a smokeless category that is now a meaningful chunk of group revenue, plus a multi-billion-pound annual capital return programme that combines dividends with active share Buybacks.

BAT has long been treated by parts of the market as a high-Yield value name with structural risks attached. Cigarette volumes in developed markets continue to decline, regulation around flavoured vapes is tightening, and illicit disposable products have weighed on legitimate vapour sales. Against that, management has been steering the group towards what it calls a smokeless world, with brands such as Velo nicotine pouches, Vuse vapour and glo heated tobacco. Market data suggests the smokeless mix in revenue is the single metric many institutional investors now track most closely.

The other reason BAT has been pulled back into the spotlight is that it is one of the few FTSE 100 names where capital return mechanics are doing meaningful work on the share count. With shares trading on a lower forward Earnings multiple than most large UK staples names, every billion pounds of buyback compounds into a measurable per-share effect over time.

Recent share price performance

Where the shares sit now

According to market data as last reported, the BATS line on the London Stock Exchange has been one of the more visible defensive performers in the FTSE 100 over the past year, with the US-listed ADR (BTI) trading around the high $50s as of mid-May 2026 and a Market Capitalisation in the region of $131 billion. Sterling and dollar listings can diverge on currency moves, so UK investors typically check the BATS LON price for a pure GBP read.

The company has approximately 2.17 billion shares outstanding, according to publicly available data, although ongoing buyback cancellations gradually reduce that figure.

What has been driving the move

A combination of factors appears to have supported the shares: a strengthening smokeless mix, ongoing buybacks reducing the share count, and a more constructive regulatory tone in the US, where US Food and Drug Administration enforcement activity is seen by some commentators as eventually helping branded products such as Vuse compete with illicit disposables. None of this is guaranteed to continue, but the direction of travel has been the dominant near-term narrative.

Currency has also been an important Factor. With the bulk of BAT s revenue earned in US dollars and other non-sterling currencies, sterling weakness can support reported revenue and EPS, while sterling strength has the opposite effect.

How it compares within the FTSE 100

BAT sits alongside other large-cap income names that UK investors typically own for yield rather than growth. Its share price behaviour tends to be less volatile than UK banks or miners, but more sensitive to regulatory headlines, currency moves and US litigation news than the average FTSE 100 stock. The closest international comparators are Philip Morris International and Altria, but on a pure FTSE 100 view there is no other UK tobacco peer of similar scale.

Business performance and earnings

The FY2025 results, published by the company in February 2026, are the foundation for the current Investment case. BAT reported that profit attributable to shareholders was £7.00 billion for 2025, up from £5.34 billion in 2024, as last reported in the preliminary results document. The combined annual and sustainability report was published under the banner Building a Smokeless World, signalling how central the smokeless category has become to the strategy.

Within the smokeless portfolio, Velo Plus, the higher-strength nicotine pouch innovation, delivered triple-digit revenue growth within a year of launch, according to BAT, while Velo reached the number two Volume and value position in the category and achieved category contribution profitability within one year of launch. Vuse Ultra was rolled out as a premium vapour innovation, with further targeted launches planned in 2026. glo Hilo, a premium heated-tobacco device, also began its rollout with what management described as encouraging early results.

glo achieved broadly flat full-year revenue growth, impacted by competitive activity and resource reallocation ahead of the Hilo launches, according to the company. The vapour category continued to be affected by illicit products in some markets, although Vuse volume and revenue showed encouraging signs of improvement in the United States.

On the combustibles side, BAT continues to manage a structurally declining cigarette industry, with the company highlighting that revenue and profit were both up in the US for the first time since 2022. That is significant because the US has been the single biggest source of pressure on group earnings in recent years and any sign of stabilisation could materially change the medium-term picture. Pricing power on premium combustible brands continues to offset some of the volume decline, but the long-term direction of travel is clear.

Dividends and Shareholder returns

For many UK investors, BAT is, first and foremost, a dividend story. The forward dividend rate is reported around £2.40 per share, with a yield in the high 5% range as of late April 2026, according to publicly available market data. That is meaningfully above the FTSE 100 average yield and is a key reason BAT shows up in so many UK Equity income portfolios.

On top of that, the company is running a £1.3 billion share buyback for 2026. BAT has entered an arrangement with Merrill Lynch International to continue purchases through to late June 2026 within the parameters of its shareholder authority. Repurchased shares are being cancelled, which mechanically reduces the share count and supports Earnings Per Share over time. The company is now reporting purchases on a weekly basis in line with updated UK Listing Rules disclosures.

For longer-term holders, the combination of dividend and buyback represents one of the more substantial cash return programmes in the FTSE 100. Buybacks at lower share prices are typically more accretive to per-share metrics, although the actual benefit depends on long-run performance of the business. Crucially, the cash to fund those returns has come from the existing Cash Flow base, with the company still investing materially in new category development.

Investors watching BAT for income may want to remember that dividends are never guaranteed, that the level of any buyback is at the board s discretion, and that future capital returns will depend on cash generation, regulation and the pace of the smokeless transition. As always, past distributions are not a reliable guide to the future.

Valuation and market position

BAT continues to trade on a noticeably lower forward earnings multiple than most large UK consumer staples, in part because of ESG-related restrictions on who can own the stock and in part because of the structural decline in cigarette volumes. That valuation gap is, in effect, the market s way of pricing in long-term risk and is what makes the high yield possible.

In market-position terms, BAT remains one of the world s largest tobacco and nicotine companies, with leading positions in many combustible markets and a top-two position in several smokeless categories, depending on geography. Its main listed peers include Philip Morris International and Altria, but on a pure FTSE 100 view there is no direct UK-listed comparison of similar scale.

Valuation is also closely linked to the credibility of the smokeless transition. If the smokeless mix continues to climb at the pace seen in 2025, some investors may eventually argue the structural derating is overdone. If the transition stalls, the multiple discount could persist. That tension is one of the defining features of how BAT trades.

Sector trends shaping British American Tobacco

Several big sector themes are shaping how investors think about BAT in 2026:

  • Smokeless adoption: The shift from combustibles to vapour, nicotine pouches and heated tobacco continues at different speeds in different markets, with pouches particularly fast-growing in the US and parts of Europe.
  • Regulation and enforcement: The FDA s approach to flavoured disposables in the US, the EU s evolving Tobacco Products Directive review and category-specific rules in markets like the UK are all key swing factors.
  • Illicit trade: BAT has flagged that illicit vapour products remain a meaningful drag on Vuse, and the company has argued that stronger enforcement could help legitimate brands recover share.
  • Capital return culture: Across global tobacco peers, share buybacks have become as important as dividends in the total shareholder return story, and BAT is firmly part of that trend.
  • Product innovation: Heated tobacco devices, premium pouch formats and reusable vapour platforms are now the visible front line of competition between the major nicotine companies.

Risks to watch

No stock is risk-free, and BAT carries some specific exposures investors may want to monitor:

  • Regulatory Risk: Tighter rules on flavours, nicotine levels or Marketing in major markets could affect both combustibles and smokeless categories.
  • Litigation: Tobacco litigation remains an ongoing feature of the industry, and outcomes can be unpredictable.
  • Currency: BAT reports in sterling but earns heavily in US dollars and emerging-market currencies, so foreign exchange swings can move reported numbers materially.
  • Pace of transition: If smokeless growth slows or if margins in new categories disappoint, the equity story becomes harder to defend.
  • ESG mandates: Some funds are restricted from owning tobacco, which can cap Demand for the shares and weigh on valuation over the long term.
  • Competitive pressure: Philip Morris International, Altria and various smaller pouch and vapour brands continue to invest aggressively in smokeless categories.