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The popularity of cigarette brands like West and Gauloises has made Imperial Brands (LSE: IMB) a dividend winner, even as the broader tobacco market has entered a state of serious decline.

Moves to simplify its product portfolio and to concentrate on these so-called Growth Brands is keeping Imperial Brands’ revenues on an upward tilt as its cartons grab share from smaller rivals.

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Bubbly growth

But the evergreen appeal of its sticks is not the only reason for investors to expect earnings, and consequently dividends, chugging higher, as the London company flings wads of cash at fast-growing markets like e-cigarettes and caffeine strips.

During the 12 months to September 2017 Imperial Brands is anticipated to generate earnings expansion of 9%, and to follow this up with a 5% rise in 2018. These readings create P/E ratios of just 14.1 times and 13.4 times respectively, nestling below the British blue-chip forward average of 15 times.

And Imperial Brands’ bubbly growth prospects are expected to translate into tastier dividends, not surprisingly. A payment of 173.8p per share anticipated for the present period yields 4.5%, while the figure moves to 4.9% for 2018, thanks to an estimated 188p dividend.

Top value

Communisis (LSE: CMS) has seen its share price continue to gallop higher in recent weeks, the stock rising 23% in value since the turn of the year alone and hitting record tops of 56p earlier in March.

The marketing ace pumped to those peaks after announcing that total revenues edged 2% higher during 2016, to £361.9m, with profit before tax jumping 15% to £16.7m.

Despite its sustained skywards share price charge, however, Communisis still offers splendid value for money in my opinion.

While the business is anticipated to endure a 5% earnings fall in 2017, Communisis is expected to bounce back with a 5% rise in 2018. And these predictions result in P/E ratios of 9.3 times and 8.9 times respectively, scandalously-low valuations in my opinion, given the communications play’s rising success with huge clients across the globe.

Big player

Communisis inked new deals with the likes of HMRC and Sony last year alone, and already counts the likes of Lloyds, Amazon and BP amongst its customer base. The company now sources just over a quarter of all revenues outside the UK, versus 18% just a year ago, and is poised to establish a base in the US this summer to boost trade in the world’s number one economy.

And I believe Communisis’s super growth outlook should keep dividends shooting northwards well into the future, helped by its ability to chuck out heaps of cash — free cash flow rose 7% last year to £12.9m.

In the meantime, projected payments of 2.6p per share for 2017 and 2.7p for next year should sate the needs of yield-hungry investors. These figures yield 4.8% and 5%, respectively.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Imperial Brands. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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