Before buying shares in any company, investors must first understand the fundamentals, which includes how a company makes revenues and profits. Being able to test the product is always a nice bonus. In certain circumstances (like a restaurant), it is easy to enter a retail location and understand how profits are made and try the product. In other industries (insurance or banking), is it sometimes much more difficult to figure out.
For investors looking to enjoy doing the research and analysis, shares of Corby Spirit and Wine Ltd. (TSX:CSW.A) may be of interest. In addition to receiving a dividend yield in excess of 3.75%, the testing of the product could be a lot of fun. The company, which is in the spirit and wine business, is responsible for J.P. Wiser’s Canadian Whisky, Polar Ice Vodka, and McGuinness Liquors. In addition to its own products, the company is responsible for the distribution of several international brands which include Absolut Vodka, Glenlivet, Jameson Irish Whiskey, Jacob’s Creek, and Wyndham wines.
While many investors are probably already familiar with at least some of these products, it never hurts to enjoy them once again. When consumers feel they are getting good value for their money, there is a high probability that they’ll return.
Over the past several years, the company has increased revenues very slowly from $132 million to $140 million over the past four fiscal years. The compounded annual growth rate (CAGR) is 1.8%, which is in line with inflation. Earnings have been comparable, moving from $0.94 in fiscal 2013 to $0.90 in fiscal 2016. The good news for investors came in the form of a dividend increase.
Since fiscal 2013, investors have seen dividends paid per share rise from $0.66 to $0.76 in fiscal 2016. With a current quarterly dividend of $0.21 per share, investors are receiving a rolling yield close to 3.75% with the potential to see an increase in the future. With distribution in place across the country, the company is in a prime position to be able to take on more brands, acting as a gateway into the Canadian market for brands from overseas.
Corby Spirit and Wine delivers a product that makes customers happy, which leads to repeat business. Investors may want to take a very good look at shares of Corby Spirit and Wine as a possible dividend-growth investment. Year to date, shares are flat, but they have increased by close to 10% over the past 52 weeks. Over the past five years, shares have enjoyed a comfortable 30% return while delivering very consistent revenues and earnings to shareholders. The dividend increases are just the icing on the cake.
5 stocks we like better than Corby Spirit and Wine Ltd.
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*returns as of 5/30/17
Fool contributor Ryan Goldsman has no position in any stocks mentioned.