3 Best Dividend-Paying Alcohol Stocks to Buy Now
By: Jonathan Wolfgram,
The three best dividend-paying alcohol stocks to buy now include two international wineries and one ultra-large brewery.
While bars and restaurants sustained meaningful damage from the economic shutdown caused by the COVID-19 pandemic, alcohol suppliers have almost fully recovered from the March 2020 crash — spurred by a combination of bars reopening as well as a growing population drinking at home. Among the most resilient alcohol suppliers are a Mexican beer company that owns the Corona and Modelo brands, a premium spirit producer previously known as Guinness and a holding company with a strong stake in Heineken and Coca-Cola Femsa.
3 Best Dividend-Paying Alcohol Stocks to Buy Now, According to DividendInvestor.com
These stocks were found and analyzed through our very own Dividend Screener on the Dividend Investor website. The Dividend Screener is a simple web-based tool that allows investors to sift through thousands of potential equities by adding their own customized criteria to find stocks that fit their portfolio’s unique needs.
Also used in the analysis of the three best dividend-paying alcohol stocks to buy now was the platform designed by our partners at Stock Rover, offering a rigorous screening program to assess performance metrics for investors. To sign up for a free two-week trial, click here.
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Here are the three best dividend-paying alcohol stocks to buy now.
3 Best Dividend-Paying Alcohol Stocks to Buy Now: #3
Constellation Brands (NYSE:STZ)
Constellation Brands (NYSE:STZ) is the largest U.S.-based multi-category alcohol supplier. It manages several alcoholic brands but is anchored by its portfolio of Mexican beer products, most notably Corona and Modelo. In addition to a variety of wines and spirits, Constellation owns a 37% share of Canopy Growth, exposing it to the growing cannabis industry.
Despite the company’s ironic ownership of Corona, Constellation Brands has weathered the coronavirus storm very well. The company suffered a major dip in March 2020 as the COVID-19 crisis began but has risen considerably since then. The company has a one-year return of 37.1% and a clear upward trend. The trailing 12-month period has been charted below alongside a 50-day moving average to clarify the general trend.
Chart provided by Stock Rover.
In addition, STZ is one of the most efficient companies in its industry, boasting an uber-high operating margin of 33.2%. For reference, the S&P 500 has an operating margin of just 12%. The company’s net margin nothing to scoff at either — with a rate of 23.5%, Constellation Brands is more than twice as efficient as both the industry average (11.2%) and the S&P 500 (7.2%). Its ability to generate strong profits during globally trying times makes the company a top performer with strong, investment-worthy financials.
Constellation Brands has a stable quarterly dividend payment of $0.75, which has remained level for the past two years. The company pays an annual dividend of $3.00, which corresponds to a forward-yield of 1.3%. Its dividend is quickly increasing and has a five-year average annual growth rate of 19.3%.
A discounted cash flow (DCF) analysis using Stock Rover values the company at $236.46, approximately 6% higher than its latest closing price of $224.15.
3 Best Dividend-Paying Alcohol Stocks to Buy Now: #2
Diageo (NYSE:DEO) is a massive wine and spirits company resulting from the merger of Grand Metropolitan and Guinness in 1997 — it has a market capitalization of over $100 billion. Diageo is most known for its premium spirits, including Johnnie Walker blended scotch, Crown Royal Canadian whiskey, Captain Morgan rum, Smirnoff vodka, Guinness stout and Baileys Irish Cream.
The company has a one-year return of 34.8% and a five-year return of 84.1%. The trailing 12-month period has been charted below alongside a 50-day moving average to clarify the general trend.
Diageo pays a semi-annual dividend of $1.53 but varies its amount based on the company’s performance. Its second dividend of each year is consistently higher than the first, and annual distributions typically hover around $3.50. The company has a forward dividend yield of 2.1% and a 10-year average annual dividend growth rate of 4.3%.
The security of this dividend, as well as the long-term growth of Diageo, are cemented by the dominance of its brands and massive market share. While sales have temporarily decreased due to the COVID-19 pandemic, the combination of growing returns and recognizability of the company’s many brands — Johnnie Walker, Guinness, Moet Hennessy, Smirnoff, Captain Morgan, and Crown Royal, to name a few — make Diageo a strong long-term play betting on the future of the alcohol industry as a whole.
The average analyst target price is $197.33, 12.42% higher than its most recent closing price of $175.53.
3 Best Dividend-Paying Alcohol Stocks to Buy Now: #1
Fomento Economico (NYSE:FMX)
Fomento Economico (NYSE:FMX) is a powerful Mexican holding company invested in Coca-Cola Femsa, Femsa Comercio and CB Equity. The company also maintains a 15% stake in Heineken and makes a large portion of its revenue from stocking convenience stores in Mexico and South America.
The company has a one-year return of 38.0%, having made a full recovery from the economic downturn of March 2020. The trailing 12-month period has been charted below alongside a 50-day moving average to clarify the general trend.
Chart provided by Stock Rover.
FMX announced earnings for the first quarter of 2021 on March 1, 2021, and shocked analysts with its results. The company maintained revenue of $6.25 billion for the quarter, exceeding analysts’ expectations of $6.32 billion and resulting in an earnings per share (EPS) of $0.17. Its next earnings call is happening April 29, 2021, for which the upward trend in stock price and the recent increase in sales means good news for investors may be in store.
Fomento Economico pays a semi-annual dividend of $0.76, with both the first and second dividends in each year historically similar. Its dividend distribution schedule, however, is unique, as it generally pays both dividends in the third and fourth quarters, while staying dormant during the first five to six months of the year. Its annual dividend for 2020 was $1.46, which corresponded to a dividend yield of 1.8% and a 10-year average annual dividend growth rate of 9.1%.
A discounted cash flow (DCF) analysis using Stock Rover values the company at $96.03, roughly 19% higher than its latest closing price of $80.71.
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Jonathan Wolfgram is an editorial staffer who writes website content at Eagle Financial Publications. He graduated from the University of Minnesota with Bachelor’s degrees in Finance and Philosophy. Jonathan writes for www.DividendInvestor.com and www.StockInvestor.com.