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What are we looking for?

Sustainable dividends from companies holding, at least for now, the Queen’s Royal Warrants.

The screen

The Royal Warrant of Appointment has graced select British goods since the 1400s to highlight their coveted spot in a sitting monarch’s pantry and household. The impact of having a royal stamp of approval is hard to quantify, but retailers point to its power and influence with consumers.

While it now falls to King Charles to decide which products will continue to have use of that crest, those warrants appointed by the Queen have as long as another two years before they expire.

We’re looking for sustainable dividend payers among the companies now enjoying the royal endorsement on key products. At the same time, their prospects – including earnings forecasts – are sound regardless of whether they continue to sport the royal seal. Using our TSI Dividend Sustainability Rating System, we award 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 has 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 to cover dividends;
  • One point if the company’s an industry leader.

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, and the TSI Dividend Advisor. TSI Network is also affiliated with Successful Investor Wealth Management.

What we found

Companies holding the Royal Warrant of Appointment

Ranking*CompanyTickerDiv. Sustain. RatingPointsDiv. Yld. (%)Mkt. Cap. (US$ Bil.)1Y Ttl. Rtn. (%) Recent Price (US$)
1Unilever PLC (ADR)UL-NAbove Average94.1116.9-17.145.92
2Kellogg Co. K-NAbove Average93.424.110.770.51
3Coca-Cola Co.KO-NAbove Average92.9261.59.260.79
4Mondelez International Inc.MDLZ-QAbove Average92.682.1-0.260.24
5Kraft Heinz Co.KHC-QAbove Average84.643.0-3.534.96
6Burberry Group PLC (ADR)BURBY-OTCAbove Average82.97.9-19.420.45
7Diageo PLC (ADR)DEO-NAbove Average82.2109.7-8.8176.07
8Premier Foods PLC (ADR)PRRFY-OTCAbove Average81.11.1-22.26.40

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.

Our TSI Dividend Sustainability Rating System generated eight stocks: London-based luxury brand Burberry Group PLC BURBY-OTC was established in 1856 and holds Royal Warrants as “Weatherproofers” and also “Outfitters.” Atlanta’s Coca-Cola Co. KO-N can claim two Royal Warrants: one for its own Coke brand as well as one first granted to Schweppes, a brand now owned by Coke, in 1836. Johnnie Walker scotch and Gordon’s gin are just two of the five Royal Warrants granted Britain-based Diageo PLC DEO-N. The first was for its Justerini & Brooks brand warrant in 1761. London-based giant Unilever PLC UL-N holds a number of Royal Warrants for food and household products including its iconic Marmite food spread. Warrant-holder Premier Foods PLC PRRFY-OTC is one of Britain’s largest food manufacturers with top brands like Mr Kipling cakes. Kellogg Co. K-N, headquartered in Battle Creek, Mich., holds a Royal Warrant for its cereals including Special K – said to be the late Queen’s favourite. Kraft Heinz Co. KHC-Q co-headquartered in Pittsburgh and Chicago, has supplied products to the Royal Household through Heinz for many years, including its HP Sauce and Lea & Perrins Worcestershire Sauce. And finally, Mondelez International Inc. MDLZ-Q, based in Chicago, counts Cadbury among its brands, and Cadbury, of course, has its own Royal Warrant.

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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