The Imperial Manufacturers (LSE: IMB) share price is up 2% as I write, on FY outcomes day (19 November).

That’s not big, however we’re 36% to this point in 2024 and 40% prior to now 5 years.

And the dividend is up 4.5% this 12 months to 153.42p, for a 6.25% yield on the present price.

Not extinguished but

That’s a powerful search for an trade that’s speculated to be dying. If true, Imperial Manufacturers’ clients don’t appear to have observed.

Internet income from tobacco and next-generation merchandise rose 4.6%. That’s on an adjusted foundation and utilizing fixed foreign money. In a multinational firm like this, I feel that’s most likely a greater measure of precise efficiency.

Earnings per share rose 10.9% on the identical foundation (up 19% on a reported foundation).

New merchandise

CEO Stefan Bomhard spoke of “aggregate market share gains across our five priority markets.” A pool of corporations competing for a falling market in conventional smoking merchandise can’t be a very good mannequin for long-term revenue, and that’s the place next-generation merchandise are available.

He added: “In next-generation merchandise (NGP), we proceed to construct scale throughout our footprint with internet revenues up 26.4% at fixed foreign money pushed by development from all three areas and market share development in all three classes.“

That eases one in all my issues. Imperial didn’t appear to be placing in the identical urgency as rival British American Tobacco. However we’re getting there.

The longer term

The board stated: “Within the coming 12 months, we count on to ship tobacco and NGP internet income development at low single-digit fixed foreign money and to develop our group adjusted working revenue near the center of our mid-single-digit vary at fixed foreign money.“

After that? “We are actually engaged on our technique for the subsequent five-year interval by way of to 2030.“

So it’s all about growing new merchandise which might be much less damaging to well being and extra socially acceptable. Then preserving market share going.

Issues look to be going nicely, however I nonetheless have my fears.

Enticing valuation

The share price has recovered nicely this 12 months. However with forecast price-to-earnings (P/E) ratios of round 10, and a dividend yield over 6%, it nonetheless seems enticing to me. I do suppose the ‘screaming cheap’ days are over, thoughts.

On the subject of dividends, money is essential, and Imperial is a champion of that. Free money circulation within the 12 months simply ended reached £2.4bn.

Remember, nevertheless, that there’s £8.3bn internet debt on the books. Not big in comparison with a £20bn market cap. However I’d watch rigorously for any signal of it creeping up.

Lengthy-term revenue

The large concern stays over the long-term way forward for the tobacco trade. And Western governments appear more and more eager to place extra hurdles in the best way of those new merchandise.

I can nonetheless see the money and dividends persevering with for a very good whereas but. I gained’t purchase for private causes. However I reckon Imperial Manufacturers needs to be value contemplating for passive-income buyers who can do their very own research and weigh up the danger.