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Fears of a stock market crash have intensified following last week’s brutal sell-off led by AI fears. And with billions wiped off the valuations of some of the world’s biggest companies, investors are understandably nervous.
The tech-heavy Nasdaq plunged 5.5% on Thursday (5 November), with AI darling Nvidia falling more than 9% after a sweeping Democrat victory in the US midterm elections stoked fears of an AI slowdown.
If you’re like me and want to explore opportunities away from the AI hype, here are a couple of FTSE 100 picks that have caught my eye.
Looking beyond AI
Established businesses that can generate significant cash flow can be invaluable during more volatile times. These companies can benefit from having considerable financial flexibility, allowing them to:
- Reward shareholders through dividends and share buybacks.
- Reinvest in growth opportunities without relying heavily on external financing.
- Strengthen their balance sheets and weather economic downturns.
So which two British businesses stand out today?
A dividend heavyweight
The first is British American Tobacco (LSE: BATS) with a 5.4% dividend yield right now.
In the first half of 2026, free cash flow before dividends reached £2.3bn, up 85% year on year. Meanwhile, management remains committed to growing dividends and completing £1.3bn of share buybacks this year.
Declining cigarette volumes, regulatory pressures, and substantial debt remain significant risks, but the company has proven an ability to adapt to changing demands and maintain financial flexibility over time.
We continue to make good progress towards our year-end target leverage range of 2.0–2.5x while rewarding shareholders through strong cash returns.
Group CEO Tadeu Marroco
A defence powerhouse
My second pick is BAE Systems (LSE: BA.).
With governments increasing defence spending, the aerospace and defence giant has significant opportunities ahead.
Its latest half-year results revealed £1.8bn in free cash flow, alongside a record £84bn order backlog. Management also upgraded its 2026 free cash flow target to more than £2bn.
With a 1,846p share price as I write on Monday morning, the stock trades on a forward price-to-earnings (P/E) ratio of 22 today.
That’s not particularly cheap, especially when cost overruns, contract delays or government spending changes could undermine future returns. However, after climbing 223% in the past five years and as a market leader in a growing industry, I think it warrants a closer look.
My verdict
Both of these stocks have a long history of strong cash generation and steady shareholder returns in mature industries.
As a Rolls-Royce shareholder, I still prefer the growth and diversification to that over BAE Systems. As a pure cash flow play, however, I think the stock warrants a closer look.
I’m not an investor in British American Tobacco for ethical reasons – and each investor needs to consider their own views – but I think it’s one of many Footsie dividend stocks to consider that could provide an income boost today.
Should you invest £5,000 in British American Tobacco P.l.c. right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if British American Tobacco P.l.c. made the list?
Ken Hall owns shares in Rolls-Royce.
This story originally appeared on Motley Fool
