But you can’t just pick any high-yielder or you could get caught in a dividend trap. So here’s a few things to look out for.

Which stocks are best for income

The first thing I look for is simple: visible earnings, regulated or sticky cash flows, and a balance sheet that doesn’t look stretched. That’s why sectors such as utilities, consumer staples, real estate investment trusts (REITs) and some energy groups often come up in income screens.

Here’s the basic maths. A 6% yield on £20,000 would pay about £1,200 a year. If those dividend returns were reinvested and compounded over 10 years, the payout could grow to around £2,144 – and that’s before any dividend growth is added. Contribute to the investment regularly and the payout grows exponentially.

To achieve optimal returns, most investors use a Stocks and Shares ISA because dividends and capital gains are sheltered from UK tax. That makes a big difference if you’re building income for the long term.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

What stocks to pick

When I try to identify income shares, I screen for a few key factors first:

• How long has the company paid dividends?
• Is the payout covered by earnings or cash flow?
• Is the debt load sensible, or is it relying on borrowing to keep distributions going?

Imperial Brands (LSE: IMB) is a good example of a stock to consider for income. The shares are up 69% over five years, the yield typically hovers near 6%, and the latest dividend payout ratio is 75.68%.

The tobacco giant’s also lifted its annual dividend by 4.5% for the past two years running, and has paid dividends for 29 years. The final dividend per share rose from 137.7p in 2020 to 160.3p in 2025.

But there’s a catch. Imperial Brands reported adjusted net debt to EBITDA of 1.8x in 2024, and it expects leverage to stay at the lower end of its 2-2.5 range.

For a tobacco business, that’s manageable, but it still deserves attention because the sector faces regulatory pressure and shifting smoking habits.

Too risky?

Investors hunting something a bit more predictable might prefer to think about British Land. It has a slightly lower 5.65% yield but with far less debt risk – it has £1.8bn of undrawn facilities and cash, with no need to refinance until late 2028.

The company’s outgoing chief executive, Simon Carter, recently said:

“The continued occupational strength of our key markets and the resulting above inflation rental growth gives us confidence for the future.”

Quick comparison:

These two examples highlight the key trade-off. Imperial Brands may look attractive on yield, but British Land offers a more predictable backdrop.

So investors must ask themselves which matters more: a higher dividend yield, or a more reliable payout?

Should you invest £5,000 in Imperial Brands Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Imperial Brands Plc made the list?

Mark Hartley owns shares in British Land.

The post How to invest £20k in FTSE 100 stocks and target a 6% dividend yield appeared first on The Twelfth Magpie.

Today, two FTSE 100 shares in particular have caught my attention: Imperial Brands (LSE:IMB) and JD Sports Fashion (LSE:JD.). Their price-to-earnings (P/E) ratios of 10 times or below suggest — for one reason or another — that they are worth serious consideration.

But in reality, are these FTSE stocks brilliant bargains or classic value traps?

Industry-leading value

At £26.53, Imperial Brands shares carry a forward P/E ratio of 9.9. That suggests excellent value compared to the broader tobacco sector, whose ratio sits at 14.5.

The company owns some of the world’s leading tobacco brands. These include JPS and West, labels that enjoy incredible pricing power. Imperial Brands is also investing heavily in fast-growing combustibles, and owns the blu vape and Pulze heated tobacco devices.

The result? Sales are still growing even as wider tobacco demand falls. But the red lights are flashing and revenues are under pressure, growing just 1.8% in October-March. I think investors could be in for a shock in the months ahead as cigarette usage fall sharper than many industry insiders predict.

FTSE 100 rival British American Tobacco announced yesterday (2 June) industry volumes were down 2.5% in the first half. That was sharper than the 2% fall the firm itself had been predicting. But it’s not just sales of traditional products that are in increasing danger. It’s possible that sales of vapes and so on could also wildly disappoint..

According to Hargreaves Lansdown,

There is some evidence to suggest that these products pose a reduced health risk compared to cigarettes, but they are coming under increasing scrutiny, with some products already banned in the US.

Are these risks adequately reflected in Imperial Brands’ share price? I’m not convinced.

Sporting hero?

Could JD Sports Fashion be a better value stock for me to buy? It’s even more attractive based on its forward-looking P/E ratio. This is 8.4 times, some distance below the long-term average of 16-17. Time to pile in?

Possibly, although the risks here also deserve serious consideration. Sales have picked up more recently in key markets like the US, though questions swirl over whether this can continue as inflation spikes again. Looking longer term, I’m also mindful of the growing popularity of Chinese sportswear brands and the danger this poses to JD Sports’ key partners like Nike and Adidas.

Yet, on balance, I believe the shares represent an attractive growth opportunity. The outlook for the broader athleisure market remains robust as consumer lifestyles and tastes evolve. Grand View Research analysts expect the global market to grow at an annualised rate of 9.9% between now and 2033, to $892bn.

Encouragingly for investors, JD Sports has significant exposure to North America and Asia following heavy recent expansion. These are the world’s largest and fastest-growing athleisure markets respectively. With a focus on the white-hot premium market, too, there’s a good chance in my view that the firm significantly outperforms the market.

It’s not without risk. But at just 84.1p, I think this could be one of the FTSE 100’s best recovery stocks to buy.

Should you invest £5,000 in Imperial Brands Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Imperial Brands Plc made the list?

Royston Wild does not hold any positions in the companies mentioned.

The post 2 FTSE 100 bargain stocks to buy in June? appeared first on The Twelfth Magpie.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

How big should my pension be?

That works out at £8,004 a year. It won’t be enough to live on in retirement, but combined with the State Pension, ISA investments and other sources of income, it will certainly help. The amount required depends entirely on the yield generated by the portfolio.

• With a 4% yield, an investor would need roughly £200,100.
• At 5%, the total falls to around £160,080.
• At 6%, the figure drops again to roughly £133,400.

Targeting stocks with higher yields will naturally reduce the amount of capital you need, but investors need to check those dividends are sustainable in the longer run.

FTSE 100 tobacco giant Imperial Brands (LSE: IMB) has a terrific track record of paying dividends. It’s increased shareholder payouts every year this millennium, with the excusable exception of the pandemic year of 2020. Tobacco shares continue to deliver remarkable returns despite smoking rates declining across much of the developed world.

Imperial Brands has used strong branding, pricing power and customer loyalty to squeeze bigger profits from a shrinking market. It has also expanded into alternatives including heated tobacco and vapes.

Its shares have climbed steadily too. They’re up almost 70% over five years, with dividends on top. But in the last three months they’ve fallen 16%. The price-to-earnings ratio has fallen to just 8.5, suggesting value. Some investors will see this as a buying opportunity but why the dip?

Half-year results (14 May) showed underlying operating profit rising just 0.6% to £1.6bn. Management still expects annual profit growth of 3% to 5% over 2026, but needs a much stronger second half to hit that target. It won’t be easy amid signs that the cost-of-living squeeze is hitting smokers.

Can the shares continue to outperform?

Imperial Brands still expects free cash flow of at least £2.2bn this year, which comfortably supports the dividend. The forward yield is a juicy 6.3%.

Tobacco stocks won’t suit everybody. I don’t buy them myself, but often wish I did. There are threats though. Smoking volumes continue to decline, regulators remain hostile and nobody yet knows whether next-generation products will replace traditional cigarettes, or spark a legal backlash.

Imperial Brands remains highly profitable and hugely cash generative. Personally, I think it’s one of today’s stronger income plays and well worth considering. For those who fancy Big Tobacco I can see a heap of FTSE 100 dividend stocks to consider instead. Some have even more generous yields.

Should you invest £5,000 in Imperial Brands Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Imperial Brands Plc made the list?

Harvey Jones does not hold any positions in the companies mentioned.

The post How much do you need in a SIPP to earn a £667 monthly passive income? appeared first on The Twelfth Magpie.

Its earnings remain remarkably steady for such a mature business, supported by disciplined cost control and resilient demand.

That combination continues to generate the huge cash flow that underpins its generous dividend.

So, what sort of annual returns are we looking at over time from this?

How large could the dividends grow?

Over the past five years alone, Imperial Brands has paid respective dividends for 2021 of 139.08p, then 141,17p, followed by 146.82p, 153.42p, and 160.32p. These have generated average yields in those years of 8.9%, 7.6%, 8.8%, 7.1% and 5.1%. The variable yield, despite rising dividends, illustrates that returns change in line with share prices — up and down.

The current dividend yield stands at 5.7%, well above the present FTSE 100 average of 3.1%.

However, analysts forecast the stock’s return will increase to 6.1% this year, 6.5% next year, and 6.8% in 2028.

What does that mean in cash terms?

Another £20,000 investment from me would make £19,402 in dividends after 10 years and £132,929 after 30 years. The figures are based on the forecast 6.8% as an average and on the dividends being reinvested into the stock.

This allows the full turbocharging effect of ‘dividend compounding’ to kick in. It is a similar idea to leaving interest to accrue in a savings account. And over 30 years — the standard investment cycle for long-term investors — the results can be extraordinary.

In this case, after 30 years, the total value of the holding (including the £20,000 initial stake) would be £152,929. And this would pay a yearly income of £10,399!

How strong is the underlying business?

To maintain a rising dividend trend, a company needs to keep its profits increasing over time.

A risk to Imperial Brands here is any tougher regulatory action in key markets that could limit pricing power. Another is any long‑term decline in nicotine product volumes across developed markets to add to the fall in cigarette volumes.

Nevertheless, analysts expect Imperial Brands’ profits to increase by a steady 4% a year to end-2028 at minimum.

This looks well supported to me by the company’s current guidance for 3%–5% adjusted operating profit growth this year. It reflects the firm’s five-year strategy to expand its smoking alternatives business while maintaining its traditional tobacco operation.

My investment view

Taken together, these factors paint a picture to me of a business with both the stability and pricing power needed to sustain long‑term dividend growth.

There are risks, of course, as in all businesses, but they look well understood and largely reflected in today’s valuation.

With earnings expected to rise steadily and cash generation remaining strong, the dividend outlook appears well supported.

And for income‑focused investors, that combination of visibility and value is hard to ignore. It leaves Imperial Brands looking like a dependable passive‑income option to consider for the years ahead.

I will be buying more of the stock very shortly. And I am also looking at other high-yield stocks that appear bargains at current pricing.

Simon Watkins has positions in Imperial Brands Plc. The Twelfth Magpie has recommended Imperial Brands Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor and Hidden Winners. Here at The Twelfth Magpie we believe that considering a diverse range of insights makes us better investors.

The post How much do I need to invest in this prime FTSE 100 income share to make £10,399 a year in dividends? appeared first on The Twelfth Magpie.

With that in mind, Imperial Brands (LSE:IMB) currently stands out as one such opportunity that might be worth considering. The tobacco stock pays an annual dividend of 160.32p per share. That means 7,485 shares generate £11,999.95 in annual passive income, essentially the equivalent of £1,000 a month.

Of course, at its current share price of 2,737p, buying close to 7,500 shares would set investors back by a fairly massive £204,864, well beyond what the average investor can reach in a single transaction.

But there’s no rule that says an investor has to buy all these shares at once. By drip feeding money over time, investors can start steadily accumulating shares and accelerate the process by reinvesting any dividends paid along the way.

But that still leaves one important question: is Imperial Brands even a good investment?

Is there a strong bull case?

Despite the shares slipping on a recent trading update, Imperial Brands remains in a remarkably resilient financial position.

The group confirmed it’s on track to deliver at least high-single-digit underlying earnings growth and more than £2.2bn in free cash flow for its 2026 fiscal year (ending in September). While expected cash generation is down from around £2.7bn in 2025, it’s still more than enough to cover the near-£1.55bn in dividends being paid out to shareholders.

In other words, the stock’s current 5.9% yield looks pretty robust. Throw in the expansive share buyback schemes, and the stock now offers one of the most attractive cash yields in the entire FTSE 100.

Moreover, when digging a bit deeper, the group’s next-generation products (NGPs), which cover vaping, heated tobacco, and oral nicotine, are growing at welcome double-digit rates in key markets including Europe, Asia, Africa, and Australasia.

That’s critical given the ongoing regulatory clampdown against traditional tobacco products. And by 2030, management expects NGPs to represent a meaningful slice of the revenue stream.

So is this a no-brainer?

Where is the risk?

While the company’s trying to transition itself towards NGPs, the reality is that Imperial Brands still makes the bulk of its money from tobacco. And as previously mentioned, regulators around the world are increasingly making life difficult for this business and its rivals.

As regulations tighten and public health awareness grows, cigarette volumes are declining structurally across developed markets. In other words, the clock’s ticking for Imperial Brands to make its successful transition, translating into some significant execution risk.

So where does that leave investors today?

The bottom line

When exploring tobacco stocks, it’s impossible to ignore the ethical dilemma of investing in a business that sells products that have proven long-term negative health effects.

However, for investors who are nonetheless comfortable investing in this sector, the company appears to be offering one of the most reliable and generous income streams in the UK stock market today.

Whether that can continue over the next decade is where the uncertainty lies. But so far, management seems to be taking the right steps. So for patient investors looking for a chunky passive income opportunity from the FTSE 100, Imperial Brands could be worth a closer look.

The post Should investors buy 7,485 shares of this FTSE 100 stock for a £1,000 monthly second income? appeared first on The Twelfth Magpie.

A risk here is any sustained strengthening of the British pound. This would cut the sterling value of profits in any of its key overseas markets, most notably the US. Another would be supply-chain disruptions that could affect production and squeeze margins.

That said, it remains a cash‑rich business with disciplined payouts that make it a rare source of dependable income. And analysts forecast its earnings will rise by a solid 4% over the medium term, underpinning these returns.

So, how much could investors make from the stock over time?

Rising dividend yields forecast

Imperials Brands’ current dividend yield is 5.8%, compared to the FTSE 100’s average of just 3.1%.

However, analysts forecast that it will lift its annual payouts to 168.8p this year, 177.3p next year, and 186.8p in 2028. These would give respective annual dividend yields of 6.1%, 6.4%, 6.7%.

The rising trend in its dividends has been a feature of the firm for years. Since 2021, for example, it has increased its yearly payout from 139.08p to 160.32p in 2025. These generated average annual dividend yields of 8.9%, 7.6%, 8.8%, 7.1%, and 5.1%.

The drop in dividend yield, despite the rising payouts, illustrates that these returns can change over time.

How much dividend income?

A £20,000 holding (the same as mine) would buy around 719 shares in Imperial Brands at today’s price.

After 10 years on the forecast 6.7% yield, investors would make £19,012 and after 30 years £128,434. This assumes that the dividends would be reinvested in the stock to utilise the turbocharging effect of dividend compounding.

At the end of the 30-year period, the total value of the holding would be £148,434 (including the initial £20,000).

And that would generate an annual income of £9,945.

Share price gains too?

All the stocks I buy primarily for their high dividend yield also look deeply discounted to their ‘fair value’. This encompasses the true worth of the underlying business, while price is just whatever the market will pay at any point.

Crucially for investors, share prices tend to move toward their fair value over the long run. So understanding the difference between the two measures — and quantifying the difference — is critical to maximising long-term profits.

My discounted cash flow analysis (including an assumed 9% discount rate) shows Imperial Brands’ shares are 44% undervalued at their current £27.83 price. Other analysts’ DCF modelling may be more bearish, along with the key assumptions used.

But my DCF result suggests a fair value for the stock of around £49.70 — much higher than today’s price.

So that price-to-value gap suggests a potentially superb buying opportunity to consider today if those DCF assumptions prove accurate.

My investment view

Imperial Brands offers a rare blend of high income, steady dividend growth, and deeply-discounted valuation, in my view. I think the stock well worth of consideration by savvy, long-term income investors.

I will certainly be adding to my holding in the firm shortly. And I also have my eye on other high-yield stocks that look seriously undervalued too.

The post I’m aiming for £9,945 in annual dividend income from 719 shares in this FTSE 100 gem appeared first on The Twelfth Magpie.

The blue-chip index closed at 10,667 on Friday (17 April). That’s just 2.2% below its all-time high of 10,910, reached on 27 February, the day before the conflict began. That’s a remarkable show of resilience. Can it go ont o break 11,000 from here?

This has been an odd crisis. We’ve had dire warnings of the biggest oil shock in history. Yet investors have been perfectly happy to take Donald Trump at his word that everything’s under control.

The FTSE 100 could fly

On Friday, they got what they wanted. Trump confirmed the Strait of Hormuz is open. The FTSE 100 jumped, while the S&P 500 hit a fresh record of 7,126 after rising 1.2%. We’ve seen this a lot lately. Geopolitical shocks trigger a sell-off, then bargain hunters pile in. The Covid slump in 2020, the Ukraine invasion in 2022 and US tariff threats in 2025 all fit that pattern.

This confirms our firm view at The Motley Fool, that selling in a panic rarely pays. Instead, investors should grit their teeth, and take the opportunity to snap up cut-price shares. It isn’t easy though, when the headlines scream catastrophe. Plenty will have waited for even lower prices and missed the bounce.

So what happens on Monday? The rally could continue. Or it might well reverse, following reports that Iranian gunboats are targeting shipping in the Strait of Hormuz. Either way, investors should find plenty of bargain stocks out there. To my surprise, cigarette maker Imperial Brands (LSE: IMB) is suddenly one of them.

Imperial Brands shares look good value

Tobacco stocks have been among the best FTSE 100 performers of the millennium. That’s extraordinary, given the steady decline in smoking rates across the West. Imperial Brands, like FTSE 100 rival British American Tobacco, has used its branding power to grab a bigger share of a shrinking market, while moving into alternatives such as vapes. And it’s kept investors sweet with a steady stream of rising dividends.

Its shares fell hard after Tuesday’s underwhelming trading update. Imperial Brands reported a decent start to its 2026 financial year and stuck to guidance of 3%–5% growth in underlying operating profit. Yet investors fixated on slippage in its Next Generation Products portfolio, and weaker market share in key regions.

That points to tougher conditions ahead but the reaction still feels harsh. Imperial Brands is the FTSE 100’s biggest faller over the last month, down more than 13.5%. Over 12 months, it’s slipped 6.5%. That leaves it looking good value though.

Imperial Brands now trades on a modest price-to-earnings ratio of 8.86, while the yield has crept up to a juicy 5.77%. Tobacco stocks aren’t for everyone, and they’re under constant regulatory threat. But at this price, and with that income, it still looks worth considering.

There’s plenty more value left in the FTSE 100 and that’s unlikely to change. Whatever happens in the next few volatile days.

The post Will the stock market go off like a rocket on Monday? appeared first on The Twelfth Magpie.

They’re still up 82% over a five-year basis. So the FTSE 100 company’s been far from a disaster for long-term investors. And that’s before factoring in its enormous dividends over the period.

Today’s investors aren’t interested in what’s gone before though. So let’s ask the question: is Imperial Brands’ share price at the start of a prolonged correction?

Guidance maintained…

Today, Imperial Brands released a fresh trading update. The market didn’t react well to what it saw.

But why? In it Imperial Brands said it remains on track to meet full-year guidance of “low-single-digit tobacco and double-digit NGP (Next Generation Products) net revenue growth”. The NGP category includes products like its blu vapes and Pulze heated tobacco.

Adjusted operating profit growth is still tipped at 3%-5%, with pricing initiatives in the first half expected to offset volume declines.

Imperial Brands is a cash machine, and is still expecting free cash flow of £2.2bn this year. And it’s sharing the wealth with investors via juicy share buybacks — it’s completed £700m of the £1.45bn of repurchases planned for this year.

All pretty solid, then.

… so what’s going on?

The boost from large buybacks and dividends to shareholder returns are nice. But the market really wants to see progress in NGP profits. Investors are running out of patience, as Imperial Brands’ plunge today shows.

Despite soaring sales, the huge investment it’s making in vapes and the like remains problematic for the bottom line. The firm said “NGP adjusted operating losses are expected to be moderately higher“, reflecting things like R&D costs, marketing expenses and distribution build-out costs.

With demand for its traditional combustible products in terminal decline, NGP profitability needs to start improving… and fast. Instead, profits from new product lines are heading in the other direction. Established products such as Gauloises cigarettes still dominate its product mix, accounting for 90% of sales.

Are Imperial Brands shares a buy?

Imperial Brands has significant pricing power across its portfolio, which it can leverage to grow earnings. And while it’s still playing catch-up in the NGP market, sales are still growing at a strong rate. Over the long term, this remains a potentially lucrative sector for the company.

So should investors consider buying Imperial Brands after its recent share price trouble? Let me tell you where I stand. With NGP profitability still possibly a long way off, and demand for traditional cigarettes cratering, it’s a share I wouldn’t touch with a bargepole.

There are also big questions over the safety of NGPs. Could we see restrictions on their sale and usage being imposed down the line, just like cigarettes? It isn’t impossible, in my view. Fierce competition in this segment also poses significant risk.

Today’s drop leaves Imperial Brands shares on a price-to-earnings (P/E) ratio of 9.9. Even at current prices I’m not tempted to buy.

The post Down 7%! Why on earth are Imperial Brands shares plummeting today? appeared first on The Twelfth Magpie.

Either way, that income is tax-free inside a Stocks and Shares ISA. So how large does an investor’s portfolio need to be to target £1,500 a month income, which adds up to £18,000 a year?

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Dividend power

Under the so-called 4% safe withdrawal rule, taking that proportion of a portfolio each year as income should preserve the underlying capital. On that basis, a portfolio of £450,000 is required to generate £18,000 a year.

If the investor is happy to draw down some of their capital as well, to increase the annual return to say, 7% a year, the required portfolio falls to £257,000. This approach demands close monitoring to make sure the capital doesn’t run dry.

Another route is to invest in higher-yielding FTSE 100 shares and draw dividends as income. If the portfolio yields on average 5% a year, the investor potentially earns £18k from £360,000, with no capital withdrawals. As my figures show, this is a movable feast. It depends on the investor and the stocks they buy.

There are some eye-popping yields on the FTSE 100 today. Insurer Legal & General Group yields 8.4% on a trailing basis, while Standard Life sits close behind at 7.9%. High yields can be hard to sustain, as companies need strong cash flows to fund them. I hold both stocks, and think they look reasonably secure for now, but I balance them with a spread of other dividend stocks.

Imperial Brands: dividend hero

Tobacco companies have been a terrific source of dividends and growth for years, and the FTSE 100 boasts two big names: British American Tobacco and Imperial Brands (LSE: IMB).

Smoking is a health hazard and regulation’s tight, but the addictive nature of the product delivers resilient cash flows and reliable dividends. Imperial Brands has increased shareholder payouts every year this millennium, except in the 2020 pandemic year. The current trailing yield is 5.1%. Forecasts suggest it will climb to 5.47% this year and 5.75% in 2027.

Investors have also enjoyed plenty of share price growth on top. The Imperial Brands’ share price has climbed 8.75% over the last year and an impressive 84% over two.

After that strong run, the Imperia Brands price-to-earnings ratio has crept up to 12.5. It’s not expensive, but not an absolute bargain. There are risks. Further regulation, especially around vaping, could hit revenues. Earnings could also fall if smoking rates in emerging markets decline as they have in the West. After such a strong recent run, the shares could naturally ease up for a while.

I think Imperial Brands is worth considering as a long-term hold for income-focused investors comfortable with buying Big Tobacco. Only invest as part of a balanced portfolio, across a range of income stocks from different sectors. Today’s stock market volatility is throwing up plenty of bargain buying opportunities.

The post How big does an ISA need to be to aim for a £1,500 monthly second income? appeared first on The Twelfth Magpie.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Market darling

Tobacco giant Imperial Brands (LSE: IMB) is one stock I’ve got my eye on.

Sure, this business won’t be to all investors’ tastes, in much the same way that people might not want to back defence contractors or gambling firms. However, there can be no doubt that it’s performed marvellously for those willing to own a slice of it for the long term.

Anyone buying this stock five years ago would have pretty much doubled their money. Despite a stunning 2025, the FTSE 100 index in which the £24bn cap features is up ‘just’ 50% in the same period. Again, we have another example of how — with a bit of skill and luck — a regular, private investor can absolutely thrash the market return. Moreover, they don’t necessarily need to get involved in the murky world of penny shares to do so.

Dependable dividend stock

Imperial’s outperformance since the global pandemic has been down to a few factors. These include a successfully-executed turnaround strategy, consistent revenue growth, and the growing popularity of next-generation products including vapes, heated tobacco, and nicotine pouches.

But it’s not just these things that have attracted new investors. Put simply, it’s also been (and remains) a stellar source of income.

Right now, analysts have the company down to return 168p per share to investors in FY26. Using the current share price, that equates to a dividend yield of 5.5%. Again, this puts the index to shame. A FTSE 100 tracker offers around 3%.

An above-average yield can sometimes be the result of a company’s share price tanking, perhaps due to concerns on its outlook. However, we know that’s not the case here. In fact, it’s estimated that Imperial’s distributions will be covered twice by profit this year. Unless we get some news flow that truly shakes market confidence, I reckon investors will get their money.

All this, when combined with a forecast price-to-earnings (P/E) ratio of nine, suggests new owners will be getting quite a lot of bang for their buck. Imperial is also cheaper than its top-tier peer British American Tobacco (P/E of 12).

Just the start of my search

Of course, depending on just one company for passive income is still courting disaster. However reliable it has been in the past, Imperial could run out of puff going forward. I’m wary that traditional tobacco consumption is still falling. There’s no guarantee that its new products will be able to make up for this lost revenue in the long term. Even if they do, a business like this will always be a target for regulators.

With this in mind, I’m going to continue adding companies to my shortlist. With markets looking fragile as the US and Iran attempt to agree on a peace deal that will actually last, now could be a great opportunity to go bargain hunting.

The post 1 mighty FTSE dividend stock I’m considering for my ISA appeared first on The Twelfth Magpie.