Imperial Brands should have stuck to fags - and big dividends

Time was you swallowed your qualms about helping spread cancer and bought shares in Imperial Brands for the dividend. On a good day in spring, you could be buying a fairly safe yield of more than 8%.

After today’s slump, it’s an even more tempting 10.4%. But there’s a problem; that is based on this year’s divi, and chief Alison Cooper has said she’ll be less generous in future.

Having increased it 10% every year for a decade, from next year, the divi will grow “progressively” — whatever that means. After today’s choker of a profit warning, you have to wonder if an outright cut could be on the way.

In the near term, it seems not. Cooper says despite the crisis in US vaping, cashflow’s all cool.

But further out? We had been led to believe vaping was the future, but now there’s a clampdown in the US and WalMart has taken vape kits off the shelves.

The reasoning seems dumb. Products with dodgy additives are suspected of causing mystery illnesses in kids, and that has been conflated with the relatively harmless stuff sold by Imps and co.

But that doesn’t mean e-cigs will be reintroduced soon. Underlying the whole panic is US parents’ deeper concern at the rapid growth of vaping among their kids. So for family supermarkets sensitive to their worries, it’s guns, yes. Nicotine vapour, no.

All the while, profits from tobacco — which really does kill you — are growing and cigarette sales will benefit if vaping is banned.

So it’s tempting to ask: why invest millions in new products, where sales are falling, competition is tough and regulations unpredictable?

Perhaps Imps should have kept paying the big divis from fags and let the company gently decline.