👋 Howdy Partner,

I hope you’ve gotten a lot out of the past year with Compounding Dividends.

• An investable universe of over 750 companies

• A Buy-Hold-Sell list to filter this very large list

• A 10-step process used to evaluate every company that might be added to our portfolio

• 10 great companies in the Portfolio that return capital to owners like us

• A Yield on Cost that puts me more than halfway to my goal of $5,000 in passive income every single month

• More than 150,000 other Partners who read the emails every week

And while that list does make me proud of all we’ve accomplished, we’re not done.

I truly believe that the best is yet to come with Compounding Dividends.

To stand still is to go backward.

That’s why I’m working behind the scenes on major improvements to make Compounding Divdiends even better.

🔥 Compounding Dividends 2.0

Here’s what coming:

• Upgraded Advice (Strong Buy - Buy - Hold - Sell) for every stock in the Portfolio

• A dedicated company page for every company we own

• An FAQ for all your questions

• A Compounding Dividends Course

British American Tobacco is an example of what can happen when you buy a great dividend company at a great price.

It’s been an amazing stock for us. Our total return since buying it in January of 2025 is more than 60%.

But that’s not the best part – our yield on cost is over 9% already, and we expect that to continue to grow.

Here’s a preview of what its Company page will look like:

British American Tobacco

I hope you’re as excited about the improvements coming as I am!

British American Tobacco Earnings Update

Summary

British American Tobacco p.l.c. (BAT) performed slightly ahead of expectations for the first half of 2025, and reaffirmed its full-year guidance.

They continue to be committed to dividend growth, an increased share buyback program, and growing profitability in their smokeless products.

Reported revenue saw a slight decline of 2.2% to £12,069 million, mainly due to currency headwinds, but grew 1.8% on a constant currency basis.

Reported diluted earnings per share (EPS) increased by 1.6% to 203.6p.

I’m very happy with this earnings report. This is a high yielder that I expect to continue growing dividends for us.

Financial Highlights:

• Adjusted Diluted EPS (as adjusted for Canada): Rose by 1.7% at constant currency.

• Share Buy-Back Program: Increased by £200 million to a total of £1.1 billion for 2025.

• Smokeless Consumers: The company added 1.4 million new users of its smokeless brands, bringing the total to 30.5 million.

• Smokeless Revenue: Now accounts for 18.2% of total Group revenue, an increase of 70 basis points compared to the full year 2024.

Dividend and Cash Flow

BAT remains focused on delivering strong cash returns to its shareholders.

• Dividend Commitment: The company maintains its commitment to dividend growth in sterling terms and a progressive dividend based on 65% of long-term sustainable earnings.

• Cash Flow: Net cash generated from operating activities was £2,309 million, a 27.0% decrease from the prior year. This was primarily due to the timing of tax payments in the U.S. and a payment related to the Franked Investment Income Group Litigation Order (FII GLO).

• Cash Conversion: The company is on track to meet or exceed its full-year operating cash conversion guidance of 90%.

• Debt Management: BAT expects to be within its target leverage range of 2.0-2.5x adjusted net debt to adjusted EBITDA by the end of 2026. Adjusted net debt was £29,749 million at the end of the period, down from £32,973 million a year prior.

Performance by Region (at Constant Rates)

Growth was led by a strong performance in the U.S. and continued momentum in the AME region, while APMEA faced headwinds.

United States (U.S.)

The U.S. market returned to growth in both revenue and profit for the first time since 2022.

• Revenue: Increased by 3.7% to £5,575 million.

• Adjusted Profit from Operations: Grew by 3.2% t