If you didn't know about their debt issues, this article makes BUD sound like the best thing since sliced bread.
Best Dividend Stocks in Beverages
(the other is Starbucks)
Looking to boost your investment income? Then check out these two dominant beverage companies.
Joe Tenebruso (TMFGuardian)
Sep 19, 2017 at 3:30PM
What's more important to you as an investor: current yield or dividend growth?
No matter your answer, the beverage industry can help you find what you're looking for. Read on to learn more about two of the best dividend stocks available in the market today -- including one that offers a sizable current yield and another that should continue to rapidly increase its payout in the years ahead.
The beer king
Anheuser-Busch InBev (NYSE:BUD) is the 800-pound gorilla of the beer industry. After its $100 billion acquisition of its former rival, SABMiller, AB InBev now controls nearly 30% of the global beer market. The combined company has a portfolio of more than 500 beers including seven of the top 10 global beer brands and 18 brands that generate more than $1 billion in retail sales.
AB InBev is the world's first truly global brewer, with leading market positions in virtually every major beer market. And while beer consumption growth has recently been tepid in developed markets such as North America, the merger with SABMiller gives AB InBev a stronger position in high-growth developing regions, particularly in Africa.
Moreover, AB InBev doesn't require much in the way of volume growth to deliver higher revenue and profits in the coming years. The company's "premiumization" strategy -- in which it more aggressively promotes its higher-priced brands -- is leading to increases in average selling prices; revenue per hectoliter rose 3.2% in the second quarter, even as total volumes increased only 1%. Additionally, the company captured $335 million in synergies and cost savings related to its merger with SABMiller in Q2, and it remains on track to realize its long-term goal for achieving $2.8 billion in total cost synergies.
In turn, higher prices and a lower cost structure are helping to drive margin expansion; Second-quarter EBITDA margin improved by 238 basis points, to 37.7%. Management is committed to passing on these rising cash profits to shareholders in the form of a bountiful 3.2% dividend. Importantly, the $3.90 per share that the company expects to payout to investors should be well-secured by the $4.14 analysts expect it to generate in earnings per share in 2017 and the $5 it's projected to deliver in 2018.
All told, investors can buy shares in this dominant beverage company today at a forward price-to-earnings ratio of 24 based on analysts' estimates for 2018 -- a relative bargain considering its nearly 22% projected EPS growth rate over the next half-decade.
