Imperial Brands was founded at the turn of the 20th century in 1901. Today, it stands as one of the largest tobacco companies worldwide, with a market cap of around 21 billion dollars. (Yahoo Finance). Isaac Toussie, an acclaimed equity investor, believes that Imperial Brands possesses some of the strongest indicators that their success will continue into the future despite regulatory scrutiny, including a high dividend yield, strong earnings and a low PE ratio.
Like many other foundational tobacco companies, Imperial Brands has existed for a large chunk of time. In over the hundred years that they have been operating, they have established a name in the industry and continue to turn out profits. Because of their long history of success, Imperial Brands has been able to maintain a strong dividend policy. The company’s current dividend yield is around 8.11% annually, a sign of a long-standing and viable company. (Yahoo Finance).
Imperial Brands also boasts a low PE ratio. Historically, Imperial Brands has maintained a low PE ratio due to their high earnings. Their current PE ratio is 8.85, which is relatively low. A lower PE indicates that shareholder do not need to purchase the company’s stock for well above what the company earns. Companies with low PE’s are generally considered safer investments due to the fact that the company generally earns an amount close to the price being paid for a stock. A low PE coupled with high dividends means that an individual will reap the rewards of their investment in the company, by profits flowing to the investor, not reinvested back into the company. Imperial Brands is established and does not need substantial reinvestment into the company, which means that more profits will flow out to equity.
Based on Imperial Brands’ financial metrics along with its PE ratio and dividend yield, Toussie indicated that this company appears sound.
This article is presented for informational purposes only and should not be relied upon as financial or other advice.