In this article, we discuss 10 best beverage dividend stocks to buy now. You can skip our detailed analysis of the beverage industry and its outlook, and go directly to read 5 Best Beverage Dividend Stocks To Buy Now.
A recent report by the Commerce Department highlighted a significant increase in consumer spending last month, indicating the economy’s strength. Despite facing higher borrowing costs, the US continues to surpass other countries globally, largely due to its strong labor market. Matt Shay, the president of the National Retail Federation (NRF), said that the future direction of interest rates and inflation remains uncertain. However, he emphasized that a robust job market and rising real wages are still playing a crucial role in supporting spending. If we look at individual sectors through data provided by CNBC/NRF Retail Monitor, we see that sales of food and beverages increased by 1% month-over-month and showed a 5.3% rise compared to the same period last year.
The food and beverage industry has experienced significant growth over time. From embracing sustainable methods to integrating technology in operations, the industry is well-positioned for future expansion and growth. According to the Food and Beverages Global Market Report 2023, the global food and beverage industry is expected to grow at a CAGR of 6.3% by 2027.
Within the beverage industry, the spirits segment maintained its lead in the market share over beer and wine for the second consecutive year in 2023. The US spirits revenue increased by 0.2%, reaching $37.7 billion, according to the annual economic report from the Distilled Spirits Council of the US (DISCUS). Even with modest revenue growth, the spirits industry outperformed beer and wine sales by 0.4% and 26.1%, respectively. The report also mentioned that the pre-mixed cocktails saw the most rapid growth among spirits categories last year, experiencing a 26.7% increase in revenue to reach $2.8 billion. Chris Swonger, president and CEO of DISCUS, spoke with CNBC about the performance of the beverage alcohol industry. He said that the spirits sector exhibited resilience, successfully sustaining its lead in the total beverage alcohol market. He further mentioned that the spirits market is now undergoing a period of adjustment.
The market witnessed the rise of tech stocks last year, which overshadowed nearly every other industry. While food and beverage stocks did not perform exceptionally, the S&P Food & Beverage Select Industry Index still managed to yield a modest return of 2.5%. The index tracks the performance of companies belonging to various food and beverage sub-industries. It is up by 3.12% this year, as of April 9. Due to the tech sector’s strong performance last year and investors’ consistent inclination toward the innovation it brings to the table, one would assume that these equities have consistently delivered strong returns over the years. While that could be true to some extent, the spotlight is now on Monster Beverage Corporation (NASDAQ:MNST)’s long-term returns. From 1994 to April 8, 2024, the stock has surged by an astounding 185,400%, making headlines for its remarkable growth. The California-based beverage company mainly specializes in energy drinks, alcohol, teas, and coffees.
As mentioned above, there is a noticeable shift toward sustainability within the food and beverage industry. According to a survey conducted by Deloitte among food and beverage executives, products are expected to emphasize sustainable properties in 52% of cases, organic qualities in 36%, and healthy aspects in 35%. These attributes are closely associated with clean labeling and the avoidance of ultra-processed food. Moreover, three-quarters of companies support front-of-package nutritional labeling.
Within the beverage industry, PepsiCo, Inc. (NASDAQ:PEP), The Coca-Cola Company (NYSE:KO), and Starbucks Corporation (NASDAQ:SBUX) are some of the best stocks that also pay dividends to shareholders. In this article, we will further take a look at some other beverage dividend stocks.
A close-up of bottles of whisky and other alcoholic beverages from a winery.
Our Methodology:
To select the best beverage stocks, we scanned Insider Monkey’s database of 933 hedge funds as of Q4 2023 and picked companies that are primarily involved in the production and distribution of a wide variety of liquid refreshments, including soft drinks, alcoholic beverages, coffee, tea, bottled water, energy drinks, fruit juices, sports and nutritional drinks, and dairy-based beverages. From that list, we selected 10 companies that pay dividends to shareholders and ranked them in ascending order of the number of hedge funds having stakes in them as of Q4 2023. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here).
10. Brown-Forman Corporation (NYSE:BF-B)
Number of Hedge Fund Holders: 21
Brown-Forman Corporation (NYSE:BF-B) is an American company that specializes in the production and marketing of alcoholic beverages. The company currently offers a quarterly dividend of $0.2178 per share and has a dividend yield of 1.76%, as of April 13. It is one of the best beverage stocks on our list as the company has been paying regular dividends to shareholders for the past 80 years while maintaining a 40-year streak of consistent dividend growth.
At the end of Q4 2023, 21 hedge funds tracked by Insider Monkey held stakes in Brown-Forman Corporation (NYSE:BF-B), compared with 30 in the previous quarter. The collective value of these stakes is over $1 billion. With over 11.6 million shares, Fundsmith LLP was the company’s leading stakeholder in Q4.
9. Bunge Global SA (NYSE:BG)
Number of Hedge Fund Holders: 32
Bunge Global SA (NYSE:BG) is a Missouri-based agribusiness and food company that manufactures a wide range of ingredients used in various beverages, including sports drinks. The company’s cash position for FY23 remained strong as it generated nearly $2.5 billion in cash flow with adjusted funds from operations. It ended the year with over $2.6 billion available in cash and cash equivalents, up from $1.1 billion in the previous quarter.
Bunge Global SA (NYSE:BG), one of the best beverage stocks, offers a quarterly dividend of $0.662 per share. The company has raised its dividends every year since 2020. The stock’s dividend yield on April 13 came in at 2.55%.
As of the end of Q4 2023, 32 hedge funds in Insider Monkey’s database held stakes in Bunge Global SA (NYSE:BG), up from 31 in the previous quarter. The total value of these stakes is more than $210.7 million.
8. Archer-Daniels-Midland Company (NYSE:ADM)
Number of Hedge Fund Holders: 34
Archer-Daniels-Midland Company (NYSE:ADM) is next on our list of the best beverage stocks that pay dividends. The company specializes in agricultural commodities and food ingredients that are used for alcoholic and non-alcoholic beverages. It currently pays a quarterly dividend of $0.50 per share, having raised it by 11.1% in January this year. Through this increase, the company stretched its dividend growth to 51 years. The stock has a dividend yield of 3.28%, as of April 13.
Insider Monkey’s database of Q4 2023 indicated that 34 hedge funds held stakes in Archer-Daniels-Midland Company (NYSE:ADM), compared with 37 in the previous quarter. The consolidated value of these stakes is nearly $820 million. Among these hedge funds, AQR Capital Management was the company’s leading stakeholder in Q4.
Horizon Kinetics LLC mentioned Archer-Daniels-Midland Company (NYSE:ADM) in its Q4 2023 investor letter. Here is what the firm has to say:
“There are the securities exchanges in our strategies, of course, which we’ve adequately covered. Also, ‘2nd tier’ varieties of asset-light businesses, like car dealerships (AutoNation and Penske Auto Group) and shipping brokers (Clarkson PLC and Braemar PLC). Less well reviewed have been a few companies that are asset intensive, but have particular inflation-beneficiary attributes.
One such is Archer-Daniels-Midland Company (NYSE:ADM), one of the largest agricultural commodities processors. They turn grains and legumes into flour, protein meals, oils, starches, syrups, cellulose pulp, what have you. Almost everything on a dinner plate came through, in some fashion, ADM’s hands. Yes, they have machinery, terminals, ships, railroad cars. And as an intermediary, theirs is a low-margin business. But it is a constant-spread business that earns a pretty stable margin on a very large sales base. When pricing rises for a period of time, that percentage spread is on a higher dollar amount, hence more dollars of income—so income can rise nicely when agricultural commodities do. And there is the opportunity to expand their margins somewhat…” (Click here to read the full text)
7. McCormick & Company, Incorporated (NYSE:MKC)
Number of Hedge Fund Holders: 38
McCormick & Company, Incorporated (NYSE:MKC) is an American food company that specializes in flavoring products used in a wide variety of beverages. In the first quarter of 2024, the company reported an operating cash flow of over $138 million, up from $103 million in the same period last year. It ended the quarter with over $178 million in cash and cash equivalents, up from $166 million in the previous quarter.
On March 27, McCormick & Company, Incorporated (NYSE:MKC) declared a quarterly dividend of $0.42 per share, which was in line with its previous dividend. Overall, the company has raised its payouts for 38 consecutive years, which makes MKC one of the best beverage stocks that pay dividends. The stock has a dividend yield of 2.34%, as of April 13.
The number of hedge funds in Insider Monkey’s database owning stakes in McCormick & Company, Incorporated (NYSE:MKC) grew to 38 in Q4 2023, from 33 in the previous quarter. The collective value of these stakes is roughly $1.5 billion.
6. The Kraft Heinz Company (NASDAQ:KHC)
Number of Hedge Fund Holders: 44
The Kraft Heinz Company (NASDAQ:KHC) is an Illinois-based multinational food and beverage company. Currently, it pays a quarterly dividend of $0.40 per share and has a dividend yield of 4.45%, as of April 13. It is one of the best beverage dividend stocks on our list as the company has raised its payouts every year since 2015.
As of the end of December 2023, 44 hedge funds in Insider Monkey’s database held stakes in The Kraft Heinz Company (NASDAQ:KHC), growing from 40 in the previous quarter. These stakes are worth over $13.5 billion in total. Warren Buffett’s Berkshire Hathaway was the company’s largest stakeholder in Q4.
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Disclosure. None. 10 Best Beverage Dividend Stocks To Buy Now is originally published on Insider Monkey.