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Number Cruncher Alcoholic beverage producers with strong brands and sustainable dividends

What are we looking for?

Sustainable dividends from alcoholic beverage producers with strong brands.

The screen

A recent Ontario receivership order revealed more than $6-million in debt for Mike Weir Wine Inc. – a Niagara-area winery leveraging the famous golfer’s name. It also highlights the intensely competitive market for all alcohol producers – both in Canada and worldwide.

Industry leaders increasingly rely on scale, brand diversity and name recognition to expand sales.

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We’re looking for the sustainable dividend payers among those top producers. We’ll then apply our TSI Dividend Sustainability Rating System, which awards points to a stock based on key factors:

  • One point for five years of continuous dividend payments – two points for more than five;
  • Two points if it raised the payment in the past five years;
  • One point for management’s commitment to dividends;
  • One point for operating in non-cyclical industries;
  • One point for limited exposure to foreign currency rates and freedom from political interference;
  • Two points for a strong balance sheet, including manageable debt and adequate cash;
  • Two points for a long-term record of positive earnings and cash flow sufficient to cover dividend payments;
  • One point if the company is a leader in its industry.

Companies with 10 to 12 points have the most secure dividends, or the highest sustainability. Those with seven to nine points have above-average sustainability; average sustainability, four to six points; and below-average sustainability, one to three points.

More about TSI Network

TSI Network is the online home of The Successful Investor Inc. – the group of widely followed Canadian investment newsletters by editor and publisher Pat McKeough. They include our award-winning flagship newsletter, The Successful Investor. The TSI Best ETFs for Canadian Investors is the latest. TSI Network is also affiliated with Successful Investor Wealth Management.

What we found

Our TSI Dividend Sustainability Rating System generated eight stocks: Canada’s Andrew Peller Ltd. successfully uses the name of hockey legend Wayne Gretzky to bolster wine and whisky sales. Molson Coors Brewing Co., the world’s third-largest beer maker, aims to add a cannabis-infused beverage to its lineup. Corby Spirit and Wine Ltd. is the company behind J.P. Wiser’s whisky and is one of this country’s leading importers. France’s Pernod Ricard SA counts Absolut vodka and Chivas Regal scotch among its brands. Guinness beer and Johnnie Walker scotch are just some of U.K.-based Diageo PLC’s premium labels. Constellation Brands Inc. is an international leader in beer, wine and spirits, with a 38-per-cent stake in cannabis-producer Canopy Growth Corp. Kentucky’s Brown-Forman Corp. numbers Jack Daniel’s among its global brands. Belgium’s Anheuser-Busch InBev SA sells Budweiser, Stella Artois and other brands.

Ranking* Company Ticker Div. Sustainability Rating Points Div. Yield % Mkt. cap. (US$ mil.) Recent price (US$) 1Y Total Rtn. (%) 
1 Molson Coors Brewing Co. TAP-N Above Average 9 2.5 14,241.2 65.67 -15.8
2 Brown-Forman Corp. BF-A-N Above Average 9 1.4 22,695.8 47.64 -4.2
3 Andrew Peller Ltd.** ADW-A-T Above Average 9 1.4 646.5 14.64 -2.2
4 Corby Spirit and Wine Ltd.** CSW-A-T Above Average 8 4.6 540.4 19.16 -10.8
5 Diageo Plc (ADR) DEO-Q Above Average 8 2.8 93,308.6 151.29 10.4
6 Pernod Ricard SA (ADR) PDRDY-O Above Average 8 1.8 44,312.3 33.55 8.5
7 Anheuser-Busch InBev  (ADR) BUD-N Above Average 7 2.3 130,109.2 78.30 -28.1
8 Constellation Brands Inc. STZ-N Above Average 7 1.7 32,911.8 172.29 -20.3

Source: Dividend Advisor

*Ranking is determined by TSI Dividend Sustainability Score. Where overall points are the same, analysts considered P/E, dividend yield and industry outlook to decide final placements. **Share price and market cap are in Canadian currency.

We advise investors to do additional research on any investments we identify here.

Scott Clayton, MBA, is senior analyst for TSI Network and associate editor of TSI Dividend Advisor.

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