What better way to generate income than soaking up dividends from companies that earn their revenues selling cold, frothy brews to the public?
While not everyone may partake, there are a lot of advantages to owning stocks in the alcohol industry. After all, how many businesses are there that make profits during good times and bad, albeit for potentially different reasons? Also, with the new marijuana legislation on the horizon, some of these businesses may be able to capitalize on entirely new revenue streams. If owning shares in some of these companies perks your interest, you might want to buy into some of the following dividend payers.
Brick Brewing Co. Ltd. (TSX:BRB)
A small player in the alcohol field, Brick Brewing is up and coming. This is definitely not a cheap stock, trading at a P/E of 24, but it is growing. The company owns and distributes a number of brands, such Seagrams and Margaritaville.
The company had a rough last quarter, with gross revenues and income down. The company stated that much of the revenue decreases were due primarily to one-time adjustments to its contract with The Beer Store in Ontario, where the store changed to a consignment model. Also, the company stated that sales were also down due to the extended cold spell at the beginning of the year, reducing demand for many of its products.
All the same, the company pays a small dividend of about 1.2% and seems to be committed to the payment. As Brick Brewing is a smaller company, it is possible that there may be more growth opportunities in the future.
Alcanna Inc. (TSX:CLIQ)
Alcanna Inc., formerly Liquor Stores NA Ltd., recently changed its name to reflect the evolution in its business strategy. While the business, established in 1993, originally was focused on liquor sales, it now aims to be involved in the cannabis space. Although its ability to capitalize on the trend remains to be seen, the company’s entrance into this new could represent a new growth driver.
The company pays a monthly dividend of approximately 3% at current prices. The dividend was cut a couple of years ago, which is disconcerting. The major reason to buy this stock would be to attempt to capitalize on the potential revenue generation from cannabis sales.
Corby Spirit and Wine Ltd. (TSX:CSW.A)
Of the three stocks mentioned, Corby is the largest company by market capitalization. Corby has numerous well-known brands that it distributes. Some of the most notable brands are Jacob’s Creek wines, Polar Ice Vodka, Lamb’s rum, and The Glenlivet single malt scotch. With all the variety, fully 87% of the company’s total revenues come from Canadian whisky, rum, and vodka.
Corby’s revenues increased 2% in the Q3 2018. The positive revenue was due primarily to new international brands, such as the premium Ungava Spirits and Foreign Affair wines. Net earnings increased by 43% year over year. Corby currently pays a dividend of just over 4% at current prices. The company has also been raising the dividend steadily for several years.
Of the three companies outlined here, each has its own strengths and weaknesses. Whether you choose to buy Brick for its potential growth, Alcanna for its cannabis strategy, or Corby for its diversified portfolio, it’s really a matter of preference and risk tolerance.
Personally, I would choose Corby out of the three listed here. Not only is its dividend higher at over 4%, I prefer the product diversification and greater international exposure. I’m also not particularly interested in the cannabis sector, so Alcanna’s entrance into that area doesn’t appeal to me as much. Just remember that these are small companies, so if you choose to add these stocks to your portfolio, they can be quite volatile. In the meantime, soak up the dividends these stocks have to offer.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Kris Knutson has no position in any of the stocks mentioned.