British American Tobacco Stock on 5 December 2025: ITC Hotels Stake Sale, Dividend Power and the 2026 Outlook

As British American Tobacco p.l.c. (LON: BATS, NYSE: BTI) trades near 52‑week highs, fresh news on asset sales, debt reduction and the smokeless pivot is reshaping the investment story just days before the company’s year‑end trading update.

1. What’s new today: BAT sells down its ITC Hotels stake to cut debt

On 5 December 2025, British American Tobacco (BAT) is in the headlines for a sizeable selldown of its stake in Indian hotel company ITC Hotels Ltd., the recently demerged hospitality arm of ITC Ltd.

According to a termsheet reported by Indian financial media, BAT’s wholly owned subsidiaries — Tobacco Manufacturers (India) Ltd., Myddleton Investment Co. and Rothmans International Enterprises — are offering between 7% and up to their full 15.3% stake in ITC Hotels via an accelerated bookbuild block deal. The floor price has been set at ₹205.65 per share, implying proceeds of around ₹3,000 crore (roughly $360 million) if the lower end of the range is sold and potentially more if BAT exits fully. ^[1]

BAT’s direct holding in ITC Hotels came from the earlier demerger of the business from ITC Ltd., where BAT has long held a strategic stake. Chief executive Tadeu Marroco has been blunt that ITC Hotels is not a strategic asset for BAT; it’s financial ballast. The company states that proceeds from the block trade will be used to accelerate progress towards its leverage target of 2–2.5x adjusted net debt / adjusted EBITDA by the end of 2026. ^[2]

In short: BAT is turning a non‑core hotel stake into cash, and that cash is being pointed straight at the balance sheet.

2. Where the share price stands on 5 December 2025

Both BAT’s London shares (BATS) and New York‑listed ADRs (BTI) have enjoyed a powerful rerating in 2025.

On the London line, Hargreaves Lansdown quotes a current price around 4,343p, with a 52‑week high near 4,426p, keeping the stock within touching distance of its peak. ^[3]
On the New York ADR, recent trading has been just under $58, with historical data showing a one‑year range of roughly $34.8–$59.3. ^[4]

Price histories from dividend data providers suggest that BTI’s adjusted price has climbed from the mid‑$30s at the end of 2024 to just under $58 in December 2025 — a gain of more than 50% in about a year. ^[5]

That share‑price recovery is central to today’s debate: the stock is no longer “left for dead”, yet still offers the sort of yield that usually belongs to more troubled names.

3. Earnings and guidance: slow top line, steady cash

BAT’s Half‑Year Report for the six months to 30 June 2025 framed 2025 as a “deployment year” but confirmed the group is on track for its full‑year guidance: ^[6]

Revenue: down 2.2% reported, but up 1.8% at constant FX to £12.1bn
New Categories (vapes, heated tobacco, modern oral): revenue flat reported but +2.4% at constant FX, with smokeless products rising to 18.2% of group revenue
Adjusted profit from operations (excluding Canada): up 1.9% at constant FX
2025 guidance: full‑year revenue growth of 1–2% and 1.5–2.5% adjusted profit growth, with performance weighted to the second half

Management continues to target a “mid‑term algorithm” of 3–5% revenue growth and 4–6% adjusted profit growth from 2026, hinging largely on the expansion and margin improvement of smokeless products. ^[7]

Earlier in the year, BAT took an approximately £6.2bn provision for a long‑running Canadian tobacco lawsuit, which Reuters estimates at close to $8bn, and warned that tax changes in Bangladesh and Australia would weigh on 2025 performance. ^[8]

That combination — modest underlying growth, big one‑off legal charges and chunky FX/tax headwinds — explains why the share price slumped in February, only to recover later as investors refocused on cash generation and the dividend.

4. Dividends and buybacks: the income engine

Whatever you think about tobacco, BAT remains engineered for income.

Dividends

On the London line:

BAT’s latest declared quarterly dividend is £0.60 per share, paid on 7 November 2025, with regular quarterly payments maintained. ^[9]
Dividend trackers estimate a forward yield around 5.5% at current prices, with three‑year dividend growth of roughly 3% per year. ^[10]

For the New York ADR (BTI):

Data from dividend services show a current yield just above 5%, with the next ex‑dividend date around late December 2025 and a scheduled payout of roughly $0.75 per ADR. ^[11]

In other words: investors buying today are still being handed a mid‑single‑digit cash yield, even after the rally.

Share buybacks

On top of that, BAT has been shrinking its share count:

In June, the group increased its 2025 buyback programme by £200m to £1.1bn, funded partly by a partial monetisation of its long‑standing ITC stake. ^[12]
Recent analysis suggests that around 5–6% of issued share capital now sits in treasury, removed from dividend and voting calculations, as BAT systematically cancels repurchased shares. TS2 Tech

For income‑oriented holders, the arithmetic is appealing: a 5%+ dividend, ongoing buybacks and low‑single‑digit revenue growth can add up to high single‑digit or even low double‑digit earnings per share growth, if management hits its targets.

5. Analyst sentiment and price targets: split views at the top

The rally has not produced consensus on what happens next.

ADR (BTI) – U.S. perspective

MarketBeat’s latest snapshot of BTI shows: ^[13]

Consensus rating: “Moderate Buy”
Analyst breakdown: 7 Buy, 1 Hold, 2 Sell
Average 12‑month price target: $51, with a range from $40 to $62

Because BTI is currently trading in the high‑$50s, that $51 average target implies downside of around 10–12% from recent levels.

However, other platforms paint a more optimistic picture:

StockAnalysis reports a single active analyst with a $62 target, implying high‑single‑digit upside and tagging BTI as a “Strong Buy” in its framework. ^[14]

That disagreement reflects a wider split: some analysts think the easy value has been realised, others see room for further gains if smokeless products deliver and capital returns stay generous.

London line (BATS) – UK perspective

On the London listing, recent collation of broker moves and fair‑value models suggests: TS2 Tech+2TS2 Tech+2

A cluster of Buy ratings from banks such as Deutsche Bank and Citigroup, with sterling price targets in the 4,800–4,900p range.
A broader analyst universe where roughly 12 of 19 analysts are buyers, five are neutral and two are sellers.
More cautious houses like RBC and Morgan Stanley sitting on the bearish side, with one widely cited $40 target on BTI and an “Underperform/Underweight” view, arguing that expectations for reduced‑risk product profitability may be over‑optimistic.

Overlay that with third‑party valuation screens showing BAT on a mid‑teens P/E and still elevated yield versus the broader FTSE 100, and you get the current market tone: no longer cheap, not yet expensive, and very sensitive to incremental news.

6. Institutional positioning: trimming, not stampeding

One of the more eye‑catching institutional moves this week came from Arrowstreet Capital.

A 13F‑style summary reported by MarketBeat on 3 December reveals that Arrowstreet: ^[15]

Sold 275,841 BTI shares, trimming its stake by 7.6%
Still holds about 3.34 million shares, worth roughly $158m
Owns an estimated 0.16% of the company, with total institutional and hedge‑fund ownership at around 16% of shares outstanding

That is a meaningful, but not dramatic, shift: a large quant‑driven manager taking some profits after a big run, rather than a wholesale rush for the exit.

At the same time, income‑oriented commentary – such as a recent 24/7 Wall St. piece flagging BTI alongside Johnson & Johnson as a dividend stock “Wall Street is piling into before 2026” – suggests ongoing interest in high‑yield defensives as investors rotate away from crowded AI trades. ^[16]

Put together, the message is that BAT is solidly back in the mainstream institutional universe, not a toxic outcast.

7. Smokeless pivot: progress and friction

The strategic narrative hasn’t changed: BAT wants to become predominantly smokeless by 2035, with at least 50% of revenue coming from reduced‑risk products and 50 million consumers of smokeless brands by 2030. TS2 Tech+1

There has been real progress:

As of H1 2025, smokeless products account for 18.2% of group revenue, up 70 basis points from 2024. ^[17]
BAT’s modern oral brand Velo is gaining share in key markets, and the company reports improving New Category margins, up 2.8 percentage points to 10.6% at constant FX. ^[18]
In the U.S., 2025 finally brought revenue and profit growth, helped by stronger combustibles pricing and momentum in Velo Plus. ^[19]

The friction is just as real:

The global vapour market is being reshaped by disposable vape bans and crackdowns on illicit products, particularly in the U.S. and UK, where BAT expects mid‑teens volume declines for legal vapour products. TS2 Tech
BAT even paused a pilot launch of the Vuse One disposable device in the U.S. as the FDA tightened enforcement against unlicensed vapes, underlining how quickly regulatory winds can shift. TS2 Tech

For investors, the smokeless pivot is thus a double‑edged sword: necessary for long‑term survival, but highly exposed to regulators, tax authorities and political sentiment.

8. Key risks still on the table

Even after the rerating, the bearish arguments haven’t evaporated. Major risk themes from company filings and independent coverage include: ^[20]

Structural decline in cigarettes
Global combustible volumes are expected to keep falling by about 2% a year or more. BAT can offset this with price/mix and smokeless growth only as long as regulation doesn’t close off both levers at once.
Regulatory and tax shocks
From “smoke‑free generation” proposals and stricter vape rules in the UK, to excise hikes in Bangladesh and Australia, the group faces a constant drip of fiscal and regulatory headwinds.
Illicit and unregulated competition
BAT repeatedly complains about illicit disposable vapes undercutting compliant players. If enforcement remains patchy, legal operators may be stuck in a margin‑squeezing fight with rule‑breakers.
Litigation overhang
The C$32.5bn Canadian settlement is a big step towards clarity, but a nearly £6.2bn charge reminds investors how expensive tobacco litigation can be. New cases or shifting settlement terms could demand further cash. ^[21]
ESG and reputational pressure
BAT scores well on certain climate metrics but remains controversial on health and lobbying; recent reporting on its attempts to influence tobacco legislation in emerging markets illustrates why many ESG‑driven funds still exclude the stock. TS2 Tech
Valuation and expectations
After a ~50% one‑year rally, some brokers argue the shares price in flawless execution on smokeless growth, buybacks and dividend stability. If any of those wobble, the downside could be swift. TS2 Tech+1

9. Catalysts to watch after 5 December 2025

From here, the next few weeks will do a lot to confirm or challenge the bullish case.

Key dates and drivers include:

9 December 2025 – Full‑Year 2025 Pre‑Close Trading Update
BAT has scheduled its pre‑close statement and investor call, where management is expected to reconfirm (or adjust) 2025 guidance, update on smokeless growth and margins, and give more colour on U.S. trends. ^[22]
Completion and pricing of the ITC Hotels block trade
The final stake sold and achieved pricing will signal how serious BAT is about accelerating deleveraging versus hoarding optionality — and how strong demand is for Indian hospitality assets. ^[23]
2026 leverage corridor
Investors will watch closely to see if the company is really tracking towards 2–2.5x adjusted net debt / EBITDA by end‑2026, a key plank of its promise to keep funding buybacks alongside the dividend. ^[24]
Next ex‑dividend dates and dividend policy signals
Late‑December ex‑dates for both BATS and BTI, plus any hints on future dividend growth, will be critical for income‑focused shareholders. ^[25]
Further regulatory headlines
Developments in UK tobacco control, U.S. FDA vape enforcement and Canadian litigation milestones all have the potential to move the stock quickly.

10. Bottom line: high yield at a higher price

As of 5 December 2025, British American Tobacco looks like this:

Near 52‑week highs in both London and New York, after a ferocious 2025 rerating. ^[26]
Still delivering a 5%+ cash dividend yield, supported by disciplined buybacks and robust cash conversion. ^[27]
Generating low‑single‑digit revenue growth and slightly higher profit growth, with smokeless products steadily gaining share of sales. ^[28]
Using non‑core disposals — first part of ITC, now potentially most or all of ITC Hotels — to both fund buybacks and work down leverage. ^[29]
Facing a split analyst community: traditional value investors and many brokers still like the income story, while others argue the “easy money” has already been made. ^[30]

For investors, the question is no longer whether BAT is survivable — the past year’s performance and the company’s cash generation have gone a long way to answering that. The real question is whether today’s price and yield adequately compensate for regulatory, litigation and transition risk in a world that is structurally trying to smoke less.