Constellation Brands Inc's Dividend Analysis
Insights into Constellation Brands Inc's Upcoming Dividend and Financial Health
Constellation Brands Inc (NYSE:STZ) recently announced a dividend of $0.89 per share, payable on 2024-02-22, with the ex-dividend date set for 2024-02-07. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Constellation Brands Inc's dividend performance and assess its sustainability.
What Does Constellation Brands Inc Do?
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Constellation Brands is the largest provider of alcoholic beverages across the beer, wine, and spirits categories in the U.S., generating 80% of revenue from Mexican beer imports under top-selling brands such as Modelo and Corona. The rest of the business includes some remaining wine and spirits brands, categories where the company continues to prune assets in recent years. With its exclusive rights tied to the Mexican beer brands effective only in the U.S., the firm has small revenue exposure to international markets. Constellation owns a 36% stake in no-moat Canopy Growth, a medicinal and recreational cannabis producer in Canada, and has a 50/50 joint venture with glass manufacturer Owens-Illinois in Mexico.
A Glimpse at Constellation Brands Inc's Dividend History
Constellation Brands Inc has maintained a consistent dividend payment record since 2015, with dividends currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Constellation Brands Inc's Dividend Yield and Growth
As of today, Constellation Brands Inc currently has a 12-month trailing dividend yield of 1.39% and a 12-month forward dividend yield of 1.43%, suggesting an expectation of increased dividend payments over the next 12 months. Over the past three years, Constellation Brands Inc's annual dividend growth rate was 2.20%. Extended to a five-year horizon, this rate increased to 6.60% per year. Based on Constellation Brands Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Constellation Brands Inc stock as of today is approximately 1.91%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-11-30, Constellation Brands Inc's dividend payout ratio is 0.35. Constellation Brands Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Constellation Brands Inc's profitability 7 out of 10 as of 2023-11-30, suggesting good profitability prospects. The company has reported net profit in 7 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Constellation Brands Inc's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Revenue is the lifeblood of any company, and Constellation Brands Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Constellation Brands Inc's revenue has increased by approximately 4.10% per year on average, a rate that underperforms approximately 58.79% of global competitors. The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Constellation Brands Inc's earnings increased by approximately -21.80% per year on average, a rate that underperforms approximately 88% of global competitors. Lastly, the company's 5-year EBITDA growth rate of -10.50%, which underperforms approximately 89.17% of global competitors.
Next Steps
In conclusion, while Constellation Brands Inc's dividend history and current yield portray a picture of shareholder return, the mixed signals from the company's growth metrics and earnings performance warrant a cautious approach. The dividend growth rate and payout ratio suggest a level of sustainability, but the declining earnings and EBITDA growth rates could be areas of concern. Investors should weigh these factors, along with the company's profitability and market position, when considering the long-term potential of their investment. For those seeking additional dividend opportunities, GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
