The Imperial Brands share price comes with a 9% dividend yield. Should I buy?

The Imperial Brands share price hasn’t really delivered a great performance in 2021 so far. Here’s my take on the FTSE 100 company.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

The Imperial Brands (LSE: IMB) share price hasn’t really increased a lot in 2021. Since the beginning of the year the stock is down over 1%. But it has risen by almost 20% over the last 12 months.

The shares are dirt-cheap right now and trade on a price-to-earnings (P/E) ratio of six times. The Imperial Brands share price also comes with a whopping 9% dividend yield. As an income hungry investor, that’s very appealing. In fact, I’d buy the stock just for the dividend alone.

5 Stocks For Trying To Build Wealth After 50

One notable billionaire made 99% of his current wealth after his 50th birthday. And here at The Motley Fool, we believe it is NEVER too late to start trying to build your fortune in the stock market. Our expert Motley Fool analyst team have shortlisted 5 companies that they believe could be a great fit for investors aged 50+ trying to build long-term, diversified portfolios.

Click here to claim your free copy now!


The FTSE 100 company reported its half-year results in May and the numbers were strong. Revenue increased by 6.1% to £15.6bn and reported operating profit improved by a stellar 77% to £1.6bn. But this wasn’t entirely due to improved performance. It was down to the disposal of its Premium Cigar Division as well the reduction in amortisation and impairments.

But if I look at organic adjusted operating profit this also improved by 8.6% to £1.6bn compared to last year. On a constant basis this increased by 8.1%. This gives me a better picture of the company’s profitability.

The firm has made a good start to implementing the new strategy it set in January. It’s a five-year plan, which includes becoming more consumer-centric. Of course, it’s still early days to assess the progress it has made, but at least it’s encouraging to see that it has made some headway.

Net debt

I like that the board is focused on reducing its net debt position. This was reduced by over £3bn to approximately £11bn on a 12-month basis. It’s worth noting here that last year the dividend was cut. So this as well as the disposal proceeds has helped the firm deleverage by a significant amount.

According to the company its net debt as a proportion of its profits or EBITDA is 2.6 times. Compare this figure to last year’s number of 3.5 times, it has reduced a lot. For me, it’s still high but the main thing is that the liabilities are reducing. 


Imperial brands remains on track to deliver full-year results in line with its guidance. So at least things haven’t deteriorated, which is a positive sign.

Of course, there’s no guarantee it will remain on track to meet these targets. But it reckons it can deliver “low-mid single digit organic adjusted operating profit growth at constant currency”.


The stock does come with risks. The rules around the level of nicotine in tobacco products are tightening and I reckon this will only become stricter going forwards.

Increasing regulation and the costs that come with it could place pressure on profitability and the Imperial Brands share price. This may also impact the dividend as well.

Should I buy?

As I said, the 9% dividend yield is too hard to ignore. I consider Imperial Brands to be a ‘steady eddy’ stock. The firm generates cash flows to pay out the income. The company is ticking along and expects to deliver some growth this year. And with a cheap valuation, I’d consider buying the shares.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

Nadia Yaqub has no position in any of the 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.

More on Investing Articles

Senior woman wearing glasses using laptop at home
Investing Articles

SSE shares are up 15% since the market correction! Should I buy?

Jabran Khan looks at why SSE shares have been on an upward trajectory in recent weeks and decides if he…

Read more »

One English pound placed on a graph to represent an economic down turn
Investing Articles

After crashing 29%, Spectris shares look cheap to me

After peaking at 4,167p last September, Spectris shares have slumped by over 29%. But I see deep value in the…

Read more »

British Pennies on a Pound Note
Investing Articles

Here is why I added this dirt-cheap FTSE 100 penny stock to my holdings!

Jabran Khan explains why he added this dirt-cheap FTSE 100 stock to his holdings and is excited by its recovery…

Read more »

Woman looking at a jar of pennies
Investing Articles

3 FTSE 100 penny stocks! Which is the cheapest buy?

Our writer examines three penny stocks that feature in the FTSE 100 index to ascertain whether they have a place…

Read more »

Arrowings ascending on a chalkboard
Investing Articles

Is the Vodafone share price an opportunity at current levels?

Jabran Khan looks at the current Vodafone share price and decides if he would add the shares to his holdings…

Read more »

Smiling senior white man talking through telephone while using laptop at desk.
Investing Articles

4 gems I’d include in my Stocks & Shares ISA

Jon Smith explains some of the top stocks he's thinking about including in his Stocks and Shares ISA a we…

Read more »

Compass pointing towards 'best price'
Investing Articles

At 85p, are Rolls-Royce shares a no-brainer buy? 

The Rolls-Royce share price look very cheap right now. And I think this might be my last chance to buy…

Read more »

positive mental health woman
Investing Articles

My £3-a-day blue-chip passive income plan

Our writer sets out his passive income plan of investing a few pounds each day in top stocks.

Read more »