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The Imperial Brands (LSE: IMB) share price has climbed 26% so far in 2025. And it got a boost of another couple of percent Tuesday morning (18 November) on the back of full-year results.
The shares have doubled in price over the past five years… that’s impressive for a company in a business that’s allegedly dying out.
The latest update shows no signs of impending demise, telling us that “strong operational momentum has delivered further broad-based growth and enabled increased shareholder returns, creating a strong platform for ongoing value creation over the next five years“.
Reported vs adjusted
I do see a flag — at least a yellow one — in these latest headline figures. Adjusted figures at constant currency show operating profit gaining 4.6% and earnings per share (EPS) up 9.1%. But as reported, operating profit fell 1.8% with EPS down 16.5%.
That’s quite a difference, so what’s behind it? The report tells us: “The alternative performance measures seek to remove the distorting effects of a number of significant gains or losses arising from transactions which are not directly related to the ongoing underlying performance of the business and may be non-recurring events or not directly within the control of management.”
Specifics include things like “amortisation and impairment of acquired intangibles” and “2030 Strategy implementation costs“, among other items. I’m sure it’s all fine, but it seems somewhat impenetrable to anyone outside the company’s accounting department.
Shareholder returns
It can make sense to focus on the ongoing underlying performance of the business, so I’m not too worried. But when we see things like this it can be a good reminder of a company facing serious change and swallowing short-term costs to steer the ship in the right direction.
Getting back to headline items, the dividend is up 4.5% to 160.32p per share. That’s a yield of 5.1% on the previous closing price.
The company also returned £1.25bn in share buybacks in 2026, taking total shareholder returns from 2021 to 2025 to £10bn. And there’s another £1.45bn buyback for 2026 already started. Free cash flow of £2.7bn has come in very handy.
Take the cash?
So, should we adopt a strategy of just sitting back and watching the cash roll in? I certainly rate that as a relatively stress-free approach worth considering. If a company can keep its dividends growing, why worry?
On the other hand, the cash flow was “driven by combustibles business“. So while new CEO Lukas Paravicini did speak of “the exciting growth opportunities in next-generation products“, we must remember it’s old-fashioned smoking that’s still the big cash cow.
How long that can keep going is the big question — though I can see a fair bit more life in the business yet.
What next?
At today’s price level we’re looking at a forecast price-to-earnings (P/E) ratio of 10 for 2026, dropping to nine a year later. And analysts expect dividend yields of 5.4% and 5.6% for the next two years — covered around twice by earnings.
We need to keep an eye on free cash flow, expected to dip to around £2.2bn in 2026. But Imperial Brands has to be one to consider for dividend investors comfortable with the long-term prospects.
