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What are we looking for?

Sustainable dividends from beverage producers adding new products and tapping key trends.

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Dutch brewer Heineken N.V. HEINY is just the latest alcohol giant to forecast slower profit growth as the economy zaps global consumption. Still, the industry’s biggest players are well-positioned to adapt to changing consumer demand and tastes – and keep dividends on tap.

Part of that adaptability is floating a growing number of new products to slake the thirst of consumers. Those alcoholic beverages include mixed cocktails such as tequila soda, in cans, and hard seltzers. Organic wines and celebrity-curated selections have also spurred industry sales, while alcohol-free beers and spirits (sometimes called “mocktails”) are gaining their own wide following.

In our search for the industry’s sustainable-dividend payers, we’ve weighed market share, revenue and earnings histories and growth prospects. We then applied our TSI Dividend Sustainability Rating System to a short list of producers. It 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 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; four to six points, average sustainability; and one to three points, below-average sustainability.

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

Spirits and dividends

Ranking*CompanyTickerDiv. Sustain. RatingPointsDiv. Yld. (%)Mkt. Cap. ($ Mil.)**1Y Ttl. Rtn. (%) Recent Price ($)**
1Molson Coors Brewing Co.TAP-NAbove Average92.913,
2Brown-Forman Corp.BF-B-NAbove Average91.526,963.3-12.257.35
3Corby Spirit and Wine Ltd.CSW-A-TAbove Average86.5356.4-19.212.97
4Andrew Peller Ltd.ADW-A-TAbove Average85.9202.3-18.84.16
5Pernod Ricard SA (ADR)PRNDYAbove Average83.042,806.0-17.433.31
6Diageo Plc (ADR)DEO-NAbove Average82.880,214.1-16.7145.18
7Heineken N.V. (ADR)HEINYAbove Average82.257,543.4-4.846.95
8Constellation Brands Inc.STZ-NAbove Average71.544,714.27.9243.60
9Anheuser-Busch InBev S.A. (ADR)BUD-NAbove Average71.0110,625.26.062.35

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 native currency

Our TSI Dividend Sustainability Rating System generated nine stocks. Andrew Peller Ltd. ADW-A-T, based in Grimsby, Ont., sells wine and whisky. Its entries in the ready-to-drink refreshment category include No Boats on Sunday ciders and seltzers. Molson Coors Brewing Co. TAP-N – jointly-based in Montreal and Colorado – is the world’s third-largest beer maker, with brands such as Coors Light, Molson Canadian and Carling. It has now expanded into non-beer products such as Vizzy and Topo Chico hard seltzers.

Constellation Brands Inc. STZ-N, an international alcohol leader based in Victor, N.Y., also keeps adding new drinks. This includes a venture with the Coca-Cola Co. for cocktail Fresca Mixed. France’s Pernod Ricard PRNDY counts Absolut Vodka and Chivas Regal scotch among its brands. Meanwhile, Toronto’s Corby Spirit and Wine Ltd. CSW-A-T, 52 per cent held by Pernod Ricard, is the company behind J.P. Wiser’s Whisky and is one of this country’s leading importers. Corby’s newest imports include the Absolut x Kahlúa espresso martini kit. Guinness beer and Johnnie Walker scotch are just some of U.K.-based Diageo plc’s DEO-N premium labels. And it’s an innovator, too, with new drinks such as Ketel One vodka espresso martini, Ketel One vodka cosmopolitan and Tanqueray gin negroni.

Kentucky’s Brown-Forman Corp. BF-B-N counts Jack Daniel’s – now with flavours such as apple and honey – among its global brands. Belgium’s Anheuser-Busch InBev S.A. BUD-N sells Budweiser, Stella Artois and more – including a line of Bud Light Seltzers. And finally, Amsterdam-based Heineken N.V. is a multinational brewer, and recent product launches include Heineken Silver, a premium lower-carb, lower-calorie beer.

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

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 23/05/24 2:59pm EDT.

SymbolName% changeLast
Molson Coors Brewing Company
Brown Forman Inc Cl B
Corby Spirit and Wine Ltd Class A
Andrew Peller Ltd Cl A
Pernod Ricard S.A.
Diageo Plc ADR
Heineken N V/S ADR
Constellation Brands Inc
Anheuser-Busch Inbev S.A. ADR

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