When it comes to stocks in the alcoholic beverages industry, Corby (TSX:CSW.A) is Absolut-ly the best choice because its portfolio is Absolut-ly fantastic.
Before you self-appointed spelling police start calling me out on not knowing how to spell absolutely, I want you to know that Corby is the company that represents the Absolut vodka brand, in addition to many others.
The company was founded in 1826 by Henry Corby and started off as a food shop and bakery. Fast forward to 1837, Corby sold his bakery and went into the grain buying business while taking an interest in distilling.
By 1859, Corby incorporated his distillery; in the 1880s and 90s the company began to bottle and sell whisky under the Corby name.
In 1969, the company was listed on the TSX under Corby Distilleries Limited – Les Distilleries Corby Limitée. In 2005, Pernod Ricard S.A. became Corby’s majority shareholder, which continues to this day.
At the time of writing, the company’s dividend yield is 5.146%! An investment of $10,000 held to the end of the year would result in dividends of $515. That’s not too shabby for money just sitting in an account.
Investors should consider buying shares of Corby based on its diverse portfolio of companies and consistent operating cash flow.
Diverse portfolio of companies
Corby’s role in its portfolio of companies consists of ownership as well as representation.
Ownership is self-explanatory, as it consists of Corby purchasing the assets and operations of a company. One example of this was in 1978 when it purchased Meagher’s Distillery Limited and William Mara Company.
This acquisition gave Corby a portfolio of liqueur and wine brands as well as international brands such as Beefeater gin.
Representation refers to a company obtaining the rights to sell goods that the original company sells. An example of representation is Corby’s relationship with Absolut. Through its collaboration with Pernod Ricard S.A. – the owner of Absolut – Corby has the exclusive rights to represent Absolut in Canada.
The company’s brand portfolio consists of J.P. Wiser’s, Absolut, Jacob’s Creek, The Glenlivet, Jameson, Havana Club and Malibu, to name but a few.
Consistent operating cash flow
The company’s operating cash flow has consistently been greater than $27 million in each of the past five fiscal years.
From fiscal 2016 to fiscal 2018, operating cash flows increased from $28 million to $34 million. This is testament to the competency of management, as operating cash flows are derived from the main line of business, suggesting that Corby’s operations are expanding.
With Corby’s portfolio of companies, there’s something for every type of drinker. From the party-oriented Havana Club drinkers to the classy Jameson-sippers and the rowdy Absolut-shot takers, Corby is well positioned to cater to all demographics.
Its operating cash flow has exceeded $27 million in each of the past five years, with an increasing operating cash flow in the past three years. This suggests that Corby’s operations are expanding which means greater returns for investors in the future.
With a dividend yield of 5.146%, you can’t go wrong by investing in Corby. After all, what’s a Friday night without liqueur?
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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 Chen Liu has no position in any of the stocks mentioned. The Motley Fool owns shares of CORBY SPIRIT AND WINE LTD CLASS A. Corby Spirit and Wine Ltd. is a recommendation of Dividend Investor Canada.