Portfolio shares: Is Imperial Brands a classic high-yield buy?

Disclosure: At the time of publication, Roland owned shares in Imperial Brands.

Fashions change but so do accepted views. A little over 20 years ago, smoke-filled pubs were the norm. Fund manager Neil Woodford was lauded for his contrarian decision to load up on cheap tobacco stocks during the dot com boom.

Now, not so much. I come home from the pub without smelling like an ashtray, and many mainstream fund managers are shunning tobacco stocks.

A turnaround opportunity?

For Imperial Brands (LON: IMB), the rise of ESG investing has coincided with a period of self-inflicted poor performance. Under former CEO Alison Cooper, pre-tax profit fell between 2017 and 2019, while investments in new generation products such as vapes failed to deliver hoped-for results.

Cigar-smoking Ms Cooper ran out of road and agreed to step down in October 2019. She was replaced by Stefan Bomhard, who was previously CEO of automotive group Inchcape.

Mr Bomhard took charge in February 2020. Since then, he's sold Imperial's luxury cigar division, cut the dividend, tightened the group's focus on cigarettes, reduced net debt and returned the business to growth.