Because the FTSE earnings season winds down, shareholders can now sit up for receiving the dividends that companies have declared. Joyful days.

As these payouts have been introduced, every got here with a vital date: the ‘ex-dividend’ date. The time period actually means ‘without dividend’. It marks the purpose (often a Thursday) when the inventory begins buying and selling with out the worth of the subsequent dividend included in its price.

As such, it’s typical for a inventory’s price to fall by roughly the quantity of the dividend on the day. So, when a inventory goes ex-dividend, the client of the inventory won’t obtain the upcoming fee. The dividend goes to the vendor of the inventory.

That is customary apply and nothing to fret about. Certainly, for shares with low yields, this lower may be so minimal that it’s barely noticeable.

FTSE 100 shares going ex-dividend

A complete of 11 Footsie shares go ex-dividend in September. They’re:

These are interim dividends besides these from packaging agency DS Smith and British American Tobacco.

Whereas future dividends can by no means be assured, these explicit ones have been authorised and are scheduled to be paid.

Mouthwatering yield

Not like the everyday twice-yearly dividend schedule, British American Tobacco pays out each quarter, which makes it uncommon within the FTSE 100. The dividend to be dished out on 1 November will probably be 58.8p per share.

On the present share price of two,777p, the dividend yield stands at a whopping 8.4%. Even higher, analysts count on the payout to climb subsequent yr, leading to a ahead yield of 9%.

The tobacco big has a multi-decade monitor report of elevating the dividend for shareholders.

Excessive-yield passive earnings

Nevertheless, it ought to be mentioned that the yield is so excessive for a cause. Buyers are taking up a myriad of dangers, from stricter tobacco laws to declining cigarette gross sales in some developed international locations.

In rising markets, the place smoking charges are nonetheless comparatively excessive, competitors is fierce and revenue margins will be decrease. In the meantime, its flagship vaping model Vuse is dealing with stress from illicit alternate options.

Regardless of these challenges, the corporate continues to generate important money flows. Within the six months to the top of June, it generated about £3bn in free money circulate, which was sufficient to cowl the massive dividends.

Adjusted diluted earnings per share got here in at 169p, beating analyst expectations for 166p.

British American Tobacco owns Fortunate Strike, which is rising quantity whereas sustaining its place because the quickest rising cigarette model within the US (an in any other case declining market).

To diversify away from cigarettes, the corporate continues to construct its non-smoking division. Income there grew 7.4% to £1.7bn in H1. Each Vuse and Velo (its nicotine pouch model) are worthwhile, whereas smokeless manufacturers now account for 17.9% of group income.

The inventory is ultra-cheap, buying and selling at simply 7.6 instances forecast earnings. That’s decrease than each the FTSE 100 common and US tobacco rivals.

Due to this fact, it’s good to see the corporate shopping for again shares. It’s going to repurchase £700m price in 2024 then £900m in 2025.

If that dividend forecast proves correct, it means buyers might count on simply over £1,000 in passive earnings every year from a £11,500 funding. Good.

I’d purchase the inventory in the present day for high-yield dividends if I didn’t already personal it.