What could be better than dividends exempt from withholding tax? $BATS (+0.31%)
$BTI (+0.52%) Arrived today🚀 Who's in too?

At the end of July, I made the decision to break up my portfolio. This is just a visual change, but it will take me back below 100,000 euros.

What did I do?

I decided to split my portfolio into three parts. Of course, as I said, this is only a visual change. But it allows me to make a somewhat more concrete evaluation.

But first, as usual, let's take a look at the S&P500:

For once, the S&P500 was up almost continuously in July. There was only a dip at the end of August. The main reason for the rise was the regulated tariffs.

In my opinion, the stock market reacts very quickly and very positively to any regulations, which, as we all know, can also be quickly discarded.

In the end, the S&P500 gained +3.97% (USD). In EUR terms, it is even up 6.1%.

Now let's move on to my new portfolio allocation. For the time being, nothing has changed in terms of positions. However, I have turned one portfolio into three or simply sorted things out.

On the one hand, of course, I have my share portfolio, which also serves as a review here.

Secondly, I have taken out my XEON. It's still running, of course, because that's the money that will be used to pay off the loan in five years' time. I don't need to keep that in retrospect.

I have also created a "pension portfolio". This contains my ETFs, which I save a total of €650 per month. This doesn't need to be included in the review either, as the savings plans are running there and there shouldn't be any changes until retirement.

What remains is my share portfolio, which contains the individual shares and gold.

As you can see, my performance is +1.45%.

The S&P500 has massively outperformed me here. At the same time, the MSCI World has also risen by 4.4%. Over the year as a whole, my portfolio is now down -1.7%, while the MSCI World is still down -2.7%. The S&P is even at -4.1%

Only the DAX is still outperforming everyone. Over the year, it is now up +17.7%.

My high and low performers in July were (top 3):

Tractor Supply ($TSCO (-0.62%) )+15,85%

British American Tobacco ($BATS (+0.31%) ) +15,59%

Ping An insurance ($2318 (+0.24%) ) +13,52%

Nestlé ($NESN (+1.63%) ) -9,32%

Nintendo ($7974 (+3.41%) ) -11,07%

United Health ($UNH (-0.5%) ) -16,29%

Dividends:

In July, I received €56.87 net from a total of 8 distributions.

Compared to July 2024 (€74.17), this was a reduction of 23.32%.

The difference is due to the fact that Ping An already paid in June this year.

Due to my new portfolio allocation, I have excluded the ETF dividends in each case and therefore the dividend is now of course also visually much lower. The dividends received in the bond portfolio flow 1:1 back into the ETFs.

Investments:

The bill for the car has finally arrived. It amounts to around €1200. Of course, that sets me back enormously. But the worst is yet to come.

The tax was due on 31.07. Well, I was already aware that I had to pay it. However, the sum amounts to €4,000 in arrears. But where does that come from? My old employer paid me a special payment from the old year (i.e. 2023), which was untaxed except for the pension contributions. I got away with it and of course I have to pay an enormous amount as a result. This is also deducted from my nest egg, which makes it worthwhile to have a nest egg.

This means I'm starting almost from scratch again with my nest egg. However, the inspection is due next month at the latest, including an oil change and possibly a brake change.

That would probably use up the nest egg completely. If the brakes don't need to be changed, I can also use the coffee money.

Let's see what August or September at the latest brings.

Buying and selling:

There were no sales in July either.

I added to Gladstone Invest ($GAIN (-0.08%) ) (150 shares) and Hercules Capital ($HTGC (-0.18%) ) (14.45 shares)

savings plans (125€ in total):

• Cintas ($CTAS (-0.96%) )
• LVMH ($MC (+1.49%) )
• Microsoft ($MSFT (-0.96%) )

Goals 2025:

I have to change my targets slightly - together with the portfolio. Overall, the €130,000 at the end of the year will remain, but this target will of course be made smaller and the focus will only be on the dividend portfolio.

To be honest, I haven't thought about the target there yet.

Target achievement at the end of July 2025 (in relation to the €130,000): 58.33%

How was your July?

What else would be of interest or what could I do better in the review?

If you liked the report and would like to read more, feel free to follow me,

If you're not interested, you can keep scrolling or use the block function.

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00:00:00 Market situation

00:15:10 BAT $BATS (+0.31%)

00:42:40 Starbucks $SBUX (+2.1%)

01:10:00 Novo Nordisk $NOVO B (+7%)

01:48:31 Strategy $MSTR (+5.29%)

Spotify

https://open.spotify.com/episode/7EFAjNvm6NM7aRIWua4hs6?si=-7yl3opfQOGyDVPoxXMlLg

YouTube

https://youtu.be/-T-JFkhRIEA

Apple Podcast

https://podcasts.apple.com/us/podcast/105-novo-nordisk-strategy-bat-starbucks/id1695869891?i=1000720249767

#podcast

soooo close😢

in 3 months then😍

Every puff on a cigarette is cash flow for me.

Every cough in the smoking area? A dividend in my account.

$BATS (+0.31%) is like a smoke break: you just stop and cash in.

Here is my review of the $BATS (+0.31%) figures

Top and bottom line estimates were exceeded.

Summary of the financial results (HY25)

• Revenue**: £12.069m, -2.2% vs HY24 (due to currency impact); +1.8% at constant exchange rates (CC).
• New categories: Sales at £1.651m, stable vs 2024; +2.4% at CC, driven by Modern Oral (+40.6%).
• Smokeless products**: 18.2% of Group sales (+70 basis points vs. FY24).

• Profit from operations
• Reported: £5.069m, +19.1% (due to lower exceptional items and an update of provisions for the Canadian litigation).
• Adjusted (for Canada, at CC): £5.435m, +1.9% vs HY24.
• Operating margin: 42.0% (reported, +7.5 percentage points); adjusted for Canada at CC: 43.2% (stable).

• Earnings per share (diluted EPS)
• Reported: 203.6 pence, +1.6 %.
• Adjusted (for Canada, at CC): 162.1 pence, +1.7 %.

• Cash flow
• Net cash from operating activities: £2.309m, -27.0% (due to tax payments in the US and payments related to the Franked Investment Income Group Litigation Order).
• Free cash flow (before dividends): £1.234m, -42.1%.
• Operating cash flow conversion rate: 75% (HY24: 78%), target of >90% for the full year 2025.

• Debt
• Adjusted net debt: £29.749m, -9.8% compared to HY24.
• Target: leverage ratio (adjusted net debt/adjusted EBITDA) of 2.0-2.5x by the end of 2026.

Strategic highlights

• Progress in RRP
• 1.4 million additional consumers of smoke-free products, 30.5 million in total
• Sales share of smoke-free products: 18.2 % (+70 basis points).
• Contribution of the new categories (Vapour, Heated Products, Modern Oral): £179m, +38.6% at CC.
• Contribution margin of the new categories: 10.6 % (+2.8 percentage points).

• Velo: Strongest growth brand in the fast-growing Modern Oral category.
• Sales growth in the USA: +384 %.
• Volume share in the USA: from 6.9 % (Nov. 2024) to 15.6 % (May 2025).

• USA: Return to sales and profit growth (+3.7 % sales, +3.2 % adjusted operating profit at CC).
• AME (Americas and Europe, excl. USA)Strong performance, sales +3.5 % at CC, adjusted operating profit +10.4 %.
• APMEA (Asia-Pacific, Middle East, Africa): Sales decline of 4.8% at CC due to regulatory and tax challenges in Australia and Bangladesh.
• Share buyback program: Increase of £200m to £1.1bn for 2025.
• Dividend policy: Progressive dividend growth (+2.0% for 2025).

Outlook for the full year 2025

• Revenue growth: Upper half of 1.0-2.0% range (at CC).
• Operating profit (adjusted, for Canada): Growth of 1.5-2.5% (at CC, including an expected currency impact of 1.0-1.5%).
• Currency impact: Expected negative effect of approx. 4% on adjusted operating profit.
• Net financing costs: approx. £1.8bn (adjusted, for Canada).
• Capital expenditure: Approx. £650m.
• Cash flow conversion: Over 90%.
• Long-term target: £50bn free cash flow (before dividends) between 2024 and 2030.

Strategic priorities

• Focus on quality growth: Investments in the largest profit pools (USA, Velo, Premium Heated Products, Vapour).
• Digital transformation: partnerships with Microsoft, SAP and AWS; 40% reduction in IT costs through strategic partnerships
• Sustainability: Progress towards a smoke-free world, supported by innovations such as Velo Plus, glo Hilo and Vuse Ultra.
• Cost savings: Fit2Win program with target of £2bn savings by 2030, including £500m annually by 2028.

Financial performance

Sales performance:

• Total sales decreased by 2.2% to £12,069m, mainly due to a negative currency impact of 4.0%. At constant exchange rates, sales grew by 1.8%, driven by:
• USAUSA: +3.7 %, supported by strong price mix effects in combustible products (+11.4 %) and the growth of Velo Plus (Modern Oral: +384 %).
• AME: +3.5 %, driven by price mix in flammable products and Modern Oral (+16.5 %).
• APMEA: -4.8 %, impacted by regulatory and tax challenges in Australia and Bangladesh.
• New categories: Sales remained stable at £1.651m, but grew by 2.4% in CC, mainly due to Modern Oral (+40.6%). Vapour (-13.0%) and Heated Products (+3.1%) showed mixed results, with Vapour impacted by illegal disposables in the US and Canada.

Operating profit:

• Reported operating profit increased 19.1% to £5.069m, boosted by lower exceptional items (£325m vs £1.306m in HY24) and a provision adjustment for the Canadian litigation (£575m net credit).
• Adjusted and at constant exchange rates (for Canada), operating profit grew by 1.9%, despite an estimated 6.2% (£166m) inflationary impact on product costs.
• Adjusted operating margin remained stable at 43.2%, demonstrating the company's ability to maintain margins despite external challenges.

Earnings per share:

• Reported EPS increased by 1.6% to 203.6p, supported by higher operating profit and the provision adjustment in Canada.
• Adjusted EPS (for Canada, at CC) grew by 1.7% to 162.1p, reflecting the solid underlying performance, despite a currency impact of 4.2%.

Cash flow and debt:

• Net cash provided by operating activities fell 27.0% to £2,309m, impacted by tax payments in the US (£700m deferred from 2024 to 2025) and payments relating to the FII GLO (£368m).
• Free cash flow (before dividends) decreased by 42.1% to £1,234m due to higher capital expenditure (£119m vs £96m) and increased interest payments (£889m vs £877m).
• Adjusted net debt decreased by 9.8% to £29.749m, supported by the partial monetization of the ITC portion (£1.052m) and positive currency effects (£1.611m).
• BAT remains confident of achieving leverage ratio of 2.0-2.5x by end 2026, supported by strong cash flow generation (target: £50bn free cash flow by 2030)

Strategic performance

"Smoke-free world"

• BAT has made progress on its ambition to create what you like to call a smoke-free world. The number of consumers of smoke-free products increased by 1.4 million to 30.5 million, and the share of sales accounted for by smoke-free products grew to 18.2 % (+70 basis points).
• Velo: The brand is the fastest growing in the Modern Oral category, with sales growth of 384 % in the US and a volume share of 13.2 % (May 2025, +6.8 percentage points). Velo holds a leading position in AME with a 62.7 % volume share. A new Velo product will also be presented, with a new pouch design to increase comfort in the mouth. It should be noted again that Velo is profitable compared to ON! which is sold by Altria below the production cost of the packaging.
• Vuse UltraThe launch of the premium vaping product in Canada showed encouraging results, with a value increase of 2.4 percentage points and improved brand perception (+13 percentage points for innovation).
• glo Hilo: The launch in Japan (Sendai) resulted in a volume share increase of 1.5 percentage points, with a planned nationwide launch in H2 2025.

Regional performance:

• USA: Return to growth (+3.7% sales, +3.2% adjusted operating profit at CC), driven by strong price mix effects in combustible products and Velo Plus growth. The volume share of combustible products increased by 10 basis points and the value share by 20 basis points.
• AMEStrong performance with sales growth of 3.5% and adjusted operating profit growth of 10.4%, driven by Brazil, Turkey and Modern Oral. However, Modern Oral's volume share fell by 30 basis points.
• APMEA: Decline of 4.8% in sales and 12.3% in adjusted operating profit due to regulatory and tax challenges in Australia (illikite products >50% of the market) and Bangladesh (27% volume decline due to tax increases).

Digital transformation:

• BAT is driving its digital transformation through partnerships with Microsoft, SAP and AWS, resulting in a 40% reduction in IT costs.
• The establishment of a GenAI lab in Dubai underlines the commitment to innovation and data-driven decisions.

Cost savings:

• Fit2Win program targets £2bn savings by 2030, with annual savings of £500m by 2028. £870m of the £1.2bn target for 2023-2025 has already been achieved by the end of 2024.
• Savings focus on cost of goods sold (COGS) and general and administrative (SG&A) costs, with an estimated one-off project cost of £500m

Risks and challenges

BAT highlights several risks that could impact future performance:

• Illegal products: Particularly in the vapor market in the US and Canada (estimated >50% of the market), although increased enforcement actions by the FDA are beginning to show positive results.
• Regulatory and tax challenges: Particularly in Australia and Bangladesh, where tax increases and regulatory restrictions are weighing on the market.
• Currency fluctuations: An expected negative currency impact of 4% on adjusted operating profit in 2025.
• Litigation: The Canadian litigation has been largely resolved through the approved plans (CAD$32.5 billion settlement), but future litigation remains a risk.

#### **2.4 Future outlook**

BAT is confident of achieving its medium-term targets (2026: 3-5% revenue growth, 4-6% adjusted operating profit growth), supported by:

• USA: Continued growth from combustible products and Velo Plus.
• Velo: Further global growth and contribution to profitability.
• Innovations: Launch of premium products such as Vuse Ultra and glo Hilo in the largest profit pools.
• Cost savings: Continuation of the Fit2Win program and optimization of operating costs.
• Financial flexibility: Increased share buybacks (£1.1bn) and dividend growth, supported by the monetization of the ITC share.

Review

BAT 2025 interim results show solid performance despite external challenges such as currency impacts and regulatory hurdles. The return to growth in the US, the strong growth of Velo is particularly impressive and the progress in the digital transformation underlines the strategic focus on increased efficiency. However, the challenges posed by illegal products remain. BAT is well positioned to achieve its medium-term goals, provided that enforcement against illegal products and market stability in key markets continue to improve.

British American Tobacco $BATS (+0.31%) performed better than expected in the first half of the year and confirmed its forecast for the year. The British tobacco company announced that it expects to reach the upper end of its forecast range for sales growth of 1 to 2 percent at constant exchange rates in 2025. For adjusted operating profit, BAT expects growth of 1.5 to 2.5 percent.

• Revenue down 2.2% (due to currency headwinds), up 1.8% at constant FX, driven by a return to growth in the U.S. (led by combustibles and Velo Plus), continued growth in AME, partly offset by APMEA

• New Categories revenue in line with 2024 at £1,651 million - an increase of 2.4% at constant FX

• Smokeless products now 18.2% of Group revenue, up 70 bps vs FY24

• Phased roll-out of innovations is expected to drive an accelerated H2 New Category performance

• New Categories contribution margin increased by 2.8 ppts to 10.6% at constant FX

• Improved combustibles financial performance (at constant FX), driven by price/mix

• Reported profit from operations up 19.1% (with reported operating margin up 7.5 ppts to 42.0%), partly due to the update of the Canadian settlement provision while the prior year was negatively impacted by non-repeating impairment charges

• Adjusted profit from operations (as adjusted for Canada) up 1.9% at constant FX, adjusted operating margin (as adjusted for Canada and at constant FX) flat at 43.2%

• Reported diluted EPS up 1.6% to 203.6p, with adjusted diluted EPS (as adjusted for Canada) up 1.7% at constant FX

• Increased 2025 share buy-back program by £200 million to £1.1 billion

On Track for Full-Year 2025 Guidance

• Global tobacco industry volume expected to be down c.2%.

• Revenue growth at the top end of 1.0-2.0% guidance range*, with mid-single digit New Category revenue growth*.

• 1.5-2.5% adjusted profit from operations growth (adj. for Canada)* including an expected c.1.0-1.5% transactional FX headwind.

• We expect a translational FX headwind of c.4% on adjusted profit from operations (adj. for Canada).

• Net finance costs expected to be c.£1.8 billion (adj. for Canada)*, subject to interest rate volatility.

• Gross capital expenditure in 2025 of approximately £650 million.

• Operating cash flow conversion that exceeds 90%.

• Continue to deleverage to our 2.0-2.5x adjusted net debt/adjusted EBITDA (adj. for Canada)* corridor by 2026.

Tadeu Marroco, Chief Executive:

"Our first half results are slightly ahead of expectations. 2025 is a year of execution and we are on track to meet our guidance for the financial year.

"We have added 1.4 million consumers (to 30.5 million) to our smoke-free brands. Our smoke-free portfolio now accounts for 18.2% of Group sales, an increase of 70 basis points compared to FY 2024.

"I am very pleased with our performance in the US. Sales and profit have increased for the first time since 2022, and in addition to the successful launch of Velo Plus, our sales volume and value share of combustible products have grown again. AME continued to perform strongly, while our performance in APMEA was impacted by tax and regulatory challenges in Bangladesh and Australia.

"Velo continues to perform very well in the fastest growing new category. Our focus on quality growth, which emphasizes investment in the largest profit pools, has resulted in higher returns, with the contribution from the new category increasing by 38.6% at constant exchange rates to £179 million, with further improvement expected for the financial year.

"Our continued strong cash conversion and the recent partial disposal of our ITC investment have improved our capital flexibility, while further financial discipline will deliver additional cost savings and smart reinvestment.

"I am confident that the investments we have made and the actions we have taken will help us return to our medium-term algorithm in 2026. In addition to rewarding our shareholders with strong cash returns, I am committed to delivering sustainable value to our shareholders."