The Point Of Imperial Brands Is The Dividend Yield

2025-04-04 13:36:27 ET

Summary

• The primary appeal of tobacco stocks like Imperial Brands is their high dividend yield, which has significantly decreased from 11% to 5.5%.
• With bond yields and other income-generating assets rising, Imperial's current yield is no longer as attractive, prompting a shift from buy to sell.
• Despite Imperial Brands being a strong, well-capitalized company, the declining yield in a higher-yield environment suggests reallocating capital to higher-yield opportunities.
• The substantial capital gain since the initial recommendation and the current market conditions make it a prudent time to sell and seek better yields elsewhere.

OK, perhaps this is for me

The point, to me, of the tobacco companies as an investment is their dividend yield. Thus, as their yield changes, so does my opinion of whether or not to be in tobacco. So it is with my view of Imperial Brands ( IMBBF ). Back 5 years I said :

There aren't that many places to gain decent income out there these days. Tobacco is an unpopular sector; that means fewer investors in it. Thus high yields for those willing to ignore fashion. The question becomes then, well, will that dividend be held?

My reading is yes. Thus, buy for being one of the few places one can gain a more than 10% income these days.

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