Peak FTSE 100 Dividend participation Imperial brands (LSE: IMB) increased by almost 70% over the past year.

A few years ago, the second largest tobacco group in Great Britain underwent a challenging patch, but now it is shooting at all cylinders. Last year, the company generated 2.4 billion pounds of surplus cash – it is enough to support the purchase of shares worth 1.25 billion pounds and an boost in dividend by 5%.

Of course, all this good news has a price. Imperial actions are not as budget-friendly as 12 months ago. This means that as a shareholder I have to decide whether to buy more, sell or just keep my shares.

Safer dividend?

In May 2024, Imperial Brands shares pricked massive dividend performance of 8.3%.

A year later, the growing price of shares means that this payment profitability dropped to 5.3%. It is still much above the average FTSE 100 of around 3.6%. However, this means that these tobacco actions are no longer one of the highest quality on the market.

As an income investor, I am looking for high performance. But I’m also interested in safe and sound dividends. In my opinion, the Imperial dividend could be safer than a year ago.

The incident level of debt means that the company does not have to spend so much cash on interest payments. This year’s payment of the forecast is twice covered by expected earnings, compared to 1.7 times in 2023.

Meanwhile, the high level of purchase of shares allowed CEO to Stefan Bomhard to maintain the total cost of dividend, while increasing the payment for action.

I think the payment looks quite safe and sound. If I am right, it may make sense to accept lower performance.

Should I worry?

Some investors decide to avoid tobacco inventory for ethical reasons. This includes many huge fund managers, whose property could otherwise ensure greater stability.

There is also a risk that tobacco business will eventually fall to a level that is not balanced. Imperial cigarettes fell by 4% last year, continuing the long -term trend. The boost in sales was caused by the boost in prices.

The sale of alternative products such as Vapes is also a risk. They can be more attractive to younger smokers than cigarettes, but I suspect that they will always be less profitable due to a much higher level of competition.

What I do

Probably should Think about buying more imperial actions. It is expected that the earnings will continue to grow, the dividend looks safe and sound for now and I think the company is under forceful management.

Actions do not look too exorbitant either. The forecast price to profit for 2025 of nine and 5.3% dividends average certifictism is still much cheaper than the average share of FTSE 100.

However, I cannot ignore the fact that this is not really a developing business. The regulatory risk is also higher than I would like. This is especially true in the case of Imperial. The group sells most of their cigarettes in highly regulated developed markets, such as Great Britain and Germany.

To sum up, I think the current price is reasonable, but not budget-friendly enough to convince me to buy. For now, I will continue to keep my imperial actions, but I don’t plan to buy more.