Investors can target £6,278 a year in income from just 607 shares in this under-the-radar FTSE gem!
Low-income investors like me are always on the hunt for stocks that quietly generate cash, regardless of market conditions.
Real gems are high-yielding names with earnings that don’t waver when the economy does. These are the types of businesses that continue to pay off even when emotions turn sour.
Imperial Brands (LSE: IMB) has long looked to me like it fits the bill perfectly.
Image source: Getty Images
Key share drivers
Imperial’s business model is essentially a revenue-generating machine, and its 2025 results underscore that strength once again. A 5.4% price increase in its burning portfolio was more than offset by declining volumes, keeping revenue moving reliably.
The company’s five main markets – the US, Germany, the UK, Spain and Australia – still deliver the largest adjusted operating profit. This emphasizes benefits in regions where performance is more predictable, which reinforces the strength of future cash flows.
A positive addition is Imperial’s strict cost control and ongoing streamlining efforts. This helped adjusted operating profit rise 4.6% to £3.99bn, beating the £3.98bn consensus. That success also fueled a 12% jump in free cash flow to £2.7bn, while adjusted earnings per share rose 9.1% to 315p.
Meanwhile, next-generation products – mainly nicotine alternatives – delivered a 13.7% increase in revenue during the year. This adds a layer of income that grows slowly in the coming years.
Imperial’s risk is that the transition to smoke-free products is delayed, allowing competitors to take advantage. Even so, analysts are still predicting that Imperial’s earnings will grow by 4% annually through 2028. And this is what ultimately supports the company’s dividend payouts over time.
The idea of separation
Over the past five years from 2021, Imperial has increased its dividend from 139.08p to 160.32p in 2025. This produced outstanding consecutive annual yields over those years of 8.9%, 7.6%, 8.8%, 7.1%, and 4.9%.
The current dividend yield of 5% reflects the fact that these annual returns can decrease as the share price increases, despite the increase in annual payments. However, it still compares very well with the current one FTSE 100 paid a dividend of 3.1 %.
That said, analysts are predicting that the dividend will rise to 168.7p this year, 177.2p next year, and 186.9p in 2028. This would yield yields of 5.1%, 5.4%, and 5.7% respectively.
What is the income?
£20,000 – the same as what I hold in the stock – will currently buy 607 shares in Imperial. Over 10 years at a forecast yield of 5.7%, this would provide £15,318 in dividends. This also assumes that these payments are reinvested in stocks to benefit from the turbocharging effect of ‘dividend compounding’.
On the same basis, dividends would rise to £90,132 after 30 years. Adding to the initial investment of £20,000, the holding would be worth £110,132 over that period. And this will pay an annual income from dividends of £6,278, assuming the dividend never drops!
My investment idea
I am confident that Imperial’s reliable cash generation will keep its dividends growing steadily.
While the switch to smokeless products is risky to use, the projected earnings growth still supports a compelling revenue case for me.
As a result, I am happy to maintain my holding in the company and believe it is worth considering by other investors.
But these aren’t the only high-yielding income stocks that have caught my eye in recent weeks.
