Researching Rogers Sugar (TSX:RSI) was a real treat — no pun intended.
Rogers Sugar and Lantic Sugar merged to form Lantic Inc. in June 2018. This amalgamation essentially gave the company brand recognition from coast to coast, as Lantic is well known in the east coast and Rogers is well known in the west coast.
The company’s revenues have increased from $532 million in FY 2014 to $805 million in FY 2018 — a compounded annual growth rate of 8.64%!
The crème de la crème of Rogers Sugar is its dividend payout, which has been $0.36 per year in the past three years. This has resulted in an average dividend yield of 6% and a current dividend yield of 6.38%.
This is a good investment, as the company has a history of profitability, and its dividend yield is one of the highest in the industry.
History of profitability
From FY 2014 to FY 2018, net income has ranged from $22 million to $66 million with the peak occurring in FY 2016 and the trough occurring the following year.
Despite this fluctuation, the company has remained profitable in the last five years reviewed, even as consumers switch to a more health-conscious lifestyle. This is supported by revenues, which have been growing each year since FY 2014.
Rogers Sugar received approval in May 2019 from the Toronto Stock Exchange for a normal course issuer bid to purchase up to 1.5 million shares. This is a good sign for investors, as it indicates that the company is confident in the future of the business as shares that are repurchased will be cancelled, which reduces the number of outstanding shares.
High dividend yield
Rogers Sugar doesn’t just have a high dividend yield; it has one of the highest dividend yields in the industry.
Take Dhampur Sugar Mills as an example. Dhampur Sugar was founded in 1933 and is currently one of India’s largest sugar producers. It is a publicly traded company on the National Stock Exchange, yet its dividend yield is a mere 4.11%
There is also Mondelez International, which is listed on the NASDAQ. Although the company produces confectioneries, it is in the business of sugar, and its dividend yield is 2.16%
Rogers Sugar’s dividend yield of 6.38% is approximately 1.5 times that of Dhampur Sugar and three times that of Mondelez International.
The numbers speak for themselves and indicate that Rogers Sugar has a generous dividend yield.
Bottom line
Through its many subsidiaries, Rogers Sugar is a household name in Canada. You would be hard-pressed to go into a friend’s kitchen and not find a product that is produced by Rogers Sugar or its many companies.
One of the highlights of this stock is the company’s history of profitability. It has been profitable in each of the past five years reviewed with net income ranging from $22 million to $66 million. This is complemented by an increase in revenues each year, which shows signs of growth.
Rogers Sugar also has a dividend yield of 6.38% which exceeds two of the biggest sugar companies in the world.
With a history of profitability and a generous dividend yield, the choice seems pretty clear: Rogers Sugar is a win in my books.
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