IMBBY - Imperial Brands: The 11.3% Forward Yield Is Attractive Despite Long-Term Risks

2024-02-18 06:35:48 ET

Summary

• While other tobacco stocks have languished in recent months, Imperial Brands' stock has seen some uptick, driven by increased dividends and share buybacks.
• With profit growth expected to continue, its dividends can also keep growing, even with its 11% forward dividend yield. And market multiples are attractive too.
• However, its long-term growth prospects are uncertain due to a slow transition to next-generation products (NGPs). Nevertheless, for now, it looks good.

Since I last wrote about the tobacco stock Imperial Brands (IMBBY)(IMBBF) in November, its price is up by 8.7% and total returns are up by 11.7%. Improvement in returns was expected, in line with my Buy rating on the stock and its ADRs at the time based on positive expectations for its financial year 2023 (FY23, year ending September 30, 2023) results....

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