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What are we looking for?

Companies offering sustainable dividends and hoping to gain from next weekend’s Super Bowl ads.

The screen

Patriots or Rams? The winner of the National Football League’s Super Bowl LIII in Atlanta will be decided on Feb. 3, but it’s already clear the event’s high-profile and often-provocative commercials will generate considerable buzz. Moreover, each brand behind those pricey ads – starting at US$5-million-plus for a 30-second spot – hopes it will immediately grab the attention needed to spur its sales and profits.

That kind of touchdown is a long shot, say marketing veterans, so we looked for Super Bowl advertisers that are already household names and set to gain yardage in 2019, regardless of any immediate payoff. We then applied our TSI Dividend Sustainability Rating System. It awards points to a dividend payer 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 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 nine stocks, all of which have the highest or above-average dividend sustainability. Consumer giant Procter & Gamble Co. will run an Olay skincare ad for female fans. Belgium’s Anheuser-Busch InBev SA will bankroll the most ads, spotlighting Budweiser, Bud Light, Stella Artois and other beers. Colgate-Palmolive Co. will showcase its Total oral-care lineup. Kraft Heinz Co. aims to sell more of its Planters Peanuts and its saucy Devour frozen-food brand, and PepsiCo Inc. will profile its new sparkling water, Bubly, in addition to Pepsi and Doritos. Germany’s Henkel AG & Co. will market its Persil ProClean detergent. Kellogg Co. will feature Pringles. Toyota Motor Corp. will spotlight its RAV4 SUV, and Intuit Inc. will promote its TurboTax software.

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

Selected Super Bowl advertisers with sustainable dividends

Ranking* Company Ticker Dividend Sustainability Rating Points Div. Yield % Market Cap (US$Bil) Recent Price (US$) 1Yr Total Return (%) 
1 Procter & Gamble Co. PG-N Highest 10 3.1 228.0 94.80 6.5
2 Colgate-Palmolive Co. CL-N Above Average 9 2.7 53.5 62.35 -18.9
3 Kraft Heinz Co. KHC-Q Above Average 9 5.3 57.7 47.28 -41.4
4 Toyota Motor Corp. (ADR) TM-N Above Average 8 2.5 181.6 122.47 -12.1
5 Kellogg Co. K-N Above Average 8 3.8 20.4 59.13 -11.7
6 PepsiCo Inc. PEP-Q Above Average 7 3.4 155.1 110.50 -8.7
7 Anheuser-Busch InBev S.A. (ADR) BUD-N Above Average 7 1.8 124.5 74.08 -35.5
8 Intuit Inc. INTU-Q Above Average 7 0.9 55.1 212.24 26.0
9 Henkel AG & Co. (ADR) HENKY-OTC Above Average 7 1.6 23.6 23.29 -27.2

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. 

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

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