Imperial Brands Share Discussion Threads

[saltaire111] 19/5/2022 09:26

I think it is inevitable that some of the major funds that have sold out of tobacco over the last year or so will have to reconsider their stance. With inflation pushing double digits, they’re gonna need something they can rely upon to continue pumping out comparable income. Otherwise they’re gonna be massively exposed.

As soon as the BoE ramps up interest rates to counter raging inflation, economies around the globe will move into recession. We’re gonna be back into households being stuck in negative equity and repossessions. House prices will crash, unemployment will go through the roof and stock markets will crash as a result of lower corporate profits, higher borrowing cost and money earning higher rates of interest.

It’s gonna get horrible over the next five years...

Sorry to be so negative, but this is how I see it.

Salty

[marktime1231] 18/5/2022 13:01

Good that brokers are starting to appreciate the trapped value in IMB but it would be amusing to read their reasons (excuses) why they had it pegged at such low target prices for so long. Not so much has changed has it?

The rather tame dividend increase is because it looks like Bomhard is pegging progress to the underlying business earnings performance, as if to make it look sustainable ... so no, it is not keeping up with inflation. However, since the starting point is 7.5% and about the highest yield going the dividend doesn't need to accelerate. Yet. Let's look at it again when the share price hits £25. And when net debt is under £8B. And when there is a 5% pa share buyback underway.

[redbaron10] 18/5/2022 12:10

I agree your point chucko1 but i invest for a regular monthly dividend income regardless of underlying share price movements of my investments.Selling shares at given points of time to provide income is not of interest to me while if total dividend returns match the erosion of value of assets by the effects of inflation then it provides some protection if those assets don't rise in price with inflation.

[chucko1] 18/5/2022 11:33

Redbaron, it is not the dividend itself (as a yield) which needs (or not) to cover the level of inflation, but it is the rise in dividend which you hope matches inflation.

In fact, it is earnings themselves which need to rise to match or surpass inflation. The company can elect to pay out an increasing amount in dividends or to retain earnings for whatever reason. In all cases, that is an increase in value of the share and its cash payments in one form or another.

Funds run by Terry Smith, for example, always pay low dividends. He argues that if you need the income, all you have to do is sell a balancing amount of shares (which will have increased in value owing to the retained earnings). In fact, he argues that you get a higher total return doing this owing to the retained earnings being invested at a superior rate. Backtesting supports this thesis, at least for the shares he owns.

[woodhawk] 18/5/2022 11:19

Deutsche Bank raises Imperial Brands target to 2,250 (2,100) pence - 'buy'

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Citigroup raises Imperial Brands price target to 1,980 (1,700) pence - 'neutral'

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JPMorgan raises Imperial Brands target to 2,250 (2,000) pence - 'overweight'

[redbaron10] 18/5/2022 08:55

Wow.UK inflation at 9%.The dividend here doesn't even cover that.....but then this is a safe dividend compared with cyclicals like commodities and other high divi payers.Certainly just having cash sitting on deposit isn't doing investors any favours.

[tuftymatt] 18/5/2022 08:11

Worth looking at the insurance sector brianbrain imo.

[brianbrain] 17/5/2022 21:12

Very pleased with results. In since £13.30 so now up 37%. Tobacco now 25% of my portfolio (others are MO up 50% and BATS up 42%). Want to diversify and have been top slicing but struggle to find a sector that pays such good safe divys so will continue to hold. GLA.

[1knocker] 17/5/2022 13:16

If a 'progressive' dividend could match inflation, we really would be cooking with gas!

[marktime1231] 17/5/2022 13:00

We might all be wondering why such a positive response today to a set of results which are exactly as pre-guided. Comforting signs that the strategy is working, novel products are hurting less and a little boost from tax accounting adjustments and favourable exchange rates to come. Confounding the critics and doubters? Or a combination of ...

Net debt is down (31 Mar 2022) to 2.4 x ebitda and falling by 0.2 per year

... and ...

"Deleverage to support a strong and efficient balance sheet with a target leverage towards the lower end of our net debt to EBITDA range of 2-2.5 times.

A progressive dividend policy with dividend growing annually taking into account underlying business performance.

Surplus capital returns to shareholders to be considered once target leverage has been achieved."

Bomhard dangling the carrot that once net debt ratio is down towards x 2 he will be considering surplus capital returns, while committing to a gently progressive dividend policy. If ebitda holds up in H2 and debt reduction continues at this pace, next year we will be enjoying "surplus capital returns". Probably.

[saltaire111] 17/5/2022 11:42

It is just a cash machine now. The share price got depressed over the last few years because it got sold off badly due to the larger funds having to sell out over ESG concerns. With hindsight, this was an astonishing opportunity to buy into a cash machine at a discounted price.

Now that the world is petrified about rising inflation and rising interest rates in borrowed money, IMB is a no-brainer!

[boxerdogz] 17/5/2022 10:55

Sssssssssssssmoking !

[saltaire111] 17/5/2022 10:51

I tend to agree with Credit Suisse - if IMB can consolidate above £18.00, then £23.00 is absolutely on the cards. Today’s update is really encouraging, as it shows solid progress with the company’s strategy and the debt situation is really positive. It could be debt free within five years if they prioritise debt repayment.

Salty.

[woodhawk] 17/5/2022 10:24

Credit Suisse raises Imperial Brands target to 2,300 (2,100) pence - 'outperform'

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Barclays raises Imperial Brands target to 2,300 (2,100) pence - 'overweight'

[philanderer] 17/5/2022 10:16

Splendid reaction :-)

[brucie5] 17/5/2022 09:33

Spud17 May '22 - 08:48 - 7523 of 7523
0 1 0
The board declared a dividend of 42.54 pence a share up from 42.12 pence a year earlier.

Every little helps.

spud
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6% this morning added to a >8% dividend. Indeed.

[spud] 17/5/2022 08:48

The board declared a dividend of 42.54 pence a share up from 42.12 pence a year earlier.Every little helps.spud

[tuftymatt] 17/5/2022 08:31

Yeah this is a great 6 month update and I really wish I had got into this far more aggressively 👍🏻

[steeplejack] 17/5/2022 08:27

Indeed,where are you going to find a dependable high yield major.Both BATs and Imperial were popular back in the 1970s,as were oils of course.They represent a default option.

[redbaron10] 17/5/2022 08:21

The market seems to like the released half years and that's the important thing.A few years back in a benign inflationary, and interest rate world, the share price would probably have fallen on these interims.Now it's a different story......investors want these consumer staple stocks now.Boring,mature, high profit,dividend paying companies.

[18bt] 17/5/2022 07:49

Cash generation bodes well - deleveraging as promised, but not quite sure what the target is and when they will hit it.

[dmore2] 17/5/2022 07:26

Imperial Brands - "Good progress in delivering on our strategic objectives...Strategic investment driving growth in aggregate market share in top-five priority markets...Strong operating cash generation...On track to deliver full year results"

ex div 27th may 21.27