Imperial Brands Share Discussion Threads

[janhar] 13/10/2021 23:36

I have packed my isa with small miners too and hold RIO for my sins - slightly concerned about collapse of Evergrande and overall impact on demand for iron ore and knock on effect on China's economy.

[cassini] 13/10/2021 22:38

That's my take too - energy, tobacco, miners. OK, miners are cyclical and have been unloved recently (unless they produced iron ore but that fell out of favour too) but certainly the precious metal miners seem to have bottomed finally (famous last words).

Oh, there are some financials that may qualify. Really dull financials like Chesnara (CSN) that just always seem to pay the dividend. Maybe some others like Aviva, Legal and General etc.

NB: Diversified Energy (DEC) just got bushwhacked by a Bloomberg Green article, which was just a bit of a cynical hit piece in my opinion but it created an opportunity to get in at at a lower price than recently. Best held in a SIPP though, as withholding tax applies. It hit a yield of 12% at one point yesterday, and the dividend is thoroughly hedged.

[topazfrenzy] 13/10/2021 22:28

Don't forget the gold and silver miners like POLY and FRES, worth adding to your defensive portfolios imo.

I'm in big tobacco and PM miners at present, some oil and that's it really.

[saltaire111] 13/10/2021 19:49

Nice NSB. Both have rallied recently.

Salty

[north sea boy] 13/10/2021 18:58

Just checked, 31.89% tobacco and oil for me currently (IMB and BP).

NSB

[saltaire111] 13/10/2021 18:12

@spud @janhar @1viky - good to hear I’m not alone and that great minds think alike!

Salty.

[1viky] 13/10/2021 15:27

Same here , loaded with Tobacco.

[spud] 13/10/2021 14:08

Yup, holding 35% tobacco and oil. spud

[janhar] 13/10/2021 13:41

Same - loaded with tobaccos and oils and reduced elsewhere

[saltaire111] 13/10/2021 13:39

somehow ended up with a duplicate post.

Salty.

[saltaire111] 13/10/2021 13:39

Bought quite a lump of these and BAT this morning. I’ve been holding a lot of cash and I think inflation is about to go berserk. So I’m buying tobacco as a hedge against inflation. I don’t really want general market equity exposure at the moment as I think inflation will lead to higher interest rates and a movement of money from equities to bonds when capital values come back down to earth. The risk premium from equities could shift quite quickly so want to be safe when it does.

I think a lot of folk will head in the direction of big tobacco soon for exactly the same reason and we could see a positive double whammy with yields gradually improving following their recent rebase and capital growth in top.

Will add more if the trend develops.

Salty.

[scobak] 11/10/2021 19:26

Thank you MB for the courtesy of your reply. I am always ready to make a daily advancement. The big can of worms I refer to is the divergent opinions of others as to how the income should be divided / allocated.
As you will have surmised by my comment, I require the dividend as an income. Cutting that to pay for buybacks and other purposes is not in my interest.
What is it that I don't understand?

[medieval blacksmith] 11/10/2021 14:59

"Big can of worms there then."

Not really. Only if you don't understand what you are doing.

[fenners66] 11/10/2021 12:34

As owners of businesses we need rewarding too.

Too easy for directors who get paid enormous salaries to cover their living expenses to surmise that the owners just want them to try and prop up share prices with buybacks.

If they can pay 9% p.a. growing by low single digits ad infinitum I don't really care about the share price that much. Those fundamentals will support the share price , so it may go up, it may go down but over the long term ,if they pay 9% + + it will be ok. Meanwhile , the OWNERS actually get an income as well.

[scobak] 11/10/2021 11:43

Big can of worms there then.
I personally need the div income to give me a quality of life (which probably now includes extra energy etc bills) that I can't afford with just state and company pittance.
By sensible investing in income stocks, my divi income far out weighs the others.
Hence I do not advocate cutting this divi further. It can clearly be afforded.

[medieval blacksmith] 11/10/2021 10:37

acsatix

"Uh oh seems like to me you imply buyback is precondition for a full rerating that is my point exactly … and as we speak they can only do a meaningful buyback by reducing the divi a bit. Every billion bought back is 90 million at current divi level that goes annually into a pot that can be used to either make the debt lower or increase the divi… no brainer."

If you have read the thread long enough or have been around ADVFN you will know I am a supporter of buybacks when executed under the right conditions and yes I do think share price rerating relies on buybacks to a greater extent in a mature industry although not exclusively to just buybacks. In the current environment better management of debt also helps which is what IMB are prioritising and rightly so. The cut in the dividend has left sufficient room to start buybacks once debt is brought back to a better level without any further cut to the dividend IMO. If you cut the dividend by more you might find the share price quickly rises as institutional/professional investors see all/most of the investor return as retained earnings and then the buyback has less benefit to shareholders because the company will be buying back closer to or above intrinsic value. Personally I believe buybacks are best done with little fanfare, nibbling away over a long period of time. Take Next as a good example of this.

[gary1966] 11/10/2021 08:33

Mr Dart nibbling away again adding nearly 0.6%

[creditcrunchies] 11/10/2021 07:53

you obviously want to see the share price collapse even more if you want a divi cut that's what happen every time companies cut the dividends. Typically a 40% to 50% drop in share price That's not what we need right now

[acsatix] 11/10/2021 01:34

“ I think investors have to get used to the fact that tobacco companies will continue to trade below intrinsic value until the share pool is reduced. ”

Uh oh seems like to me you imply buyback is precondition for a full rerating that is my point exactly … and as we speak they can only do a meaningful buyback by reducing the divi a bit. Every billion bought back is 90 million at current divi level that goes annually into a pot that can be used to either make the debt lower or increase the divi… no brainer.

[sumday] 09/10/2021 12:48

@Medieval Blacksmith. Thank you for your reply

[medieval blacksmith] 09/10/2021 12:43

Sumday

“ According to ADVFN financials ROE on IMB is 30.69 per cent but only 10.21 percent on BATS. Are these figures pretty accurate and if so why the significant difference?”

I don’t use ADVFN for figures but they seem to reconcile with those on Sharescope.

The significant difference is caused by BAT acquiring the remainder of Reynolds American - that it didn’t already own - back in 2017. It increased the company’s NAV by about $52Bn, over $100Bn of that being intangible assets. Before that its ROE going rate was between 60-70%.

[spud] 09/10/2021 12:17

For once we concur!spud

[medieval blacksmith] 09/10/2021 12:13

I think they have cut the dividend enough already. The dividend is sustainable, quite easily ATM, and by a large margin. That implies that it is the share price that is artificially low rather than the dividend yield being artificially high. I think investors have to get used to the fact that tobacco companies will continue to trade below intrinsic value until the share pool is reduced. Because of the potential for the cost of debt to increase over the next decade it is prudent to have debt low and credit ratings the best they can be. Particularly for a company with little top line growth. It also makes sense to not reduce the debt to insignificant amounts because returns on equity will fall, you may not make the best use of tax incentives and you leave the company open to a potential buy out based on increasing debt. This is seen by the market as an income stock and so a good dividend yield is part of its well understood modus operandi. If you want pure, none dividend growth stocks go and buy them, there are plenty of them around , but you will end up paying well over intrinsic value for them.

To suggest some of us need to plan our lives better is ridiculous. You can do all the planning you like but nobody plans for a .com boom/bust, world credit crisis, European banking crisis, climate change crisis, central bank pumping over decades, and a pandemic to all occur within a two decade period. If you are that type of person who does plan for all these I would expect you to be working on your nuclear bunker in your back garden this afternoon.

Investing has been quite easy for many over the last decade or so for those who cannot, or do not, consider risk and don’t involve themselves in business valuation. They will eventually find out the errors of their ways when the music stops and they find themselves without a chair.

[sumday] 09/10/2021 11:16

According to ADVFN financials ROE on IMB is 30.69 per cent but only 10.21 percent on BATS. Are these figures pretty accurate and if so why the significant difference?