We recently published a list of 10 Best Dividend-Paying Beverage Stocks to Buy. In this article, we are going to take a look at where Molson Coors Beverage Company (NYSE:TAP) stands against other best dividend-paying beverage stocks to buy.
The American consumer staples industry is currently dealing with an evolving landscape, with a key shift being the heightened influence of health considerations on consumer behavior. Health and wellness are now common themes of interest among the younger generation of consumers and the prevalence of weight-loss drugs has also led to a change in consumer’s eating habits, including both reducing appetite and altering the kind of foods and drinks they want.
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Many industry players have realized that they’ll need to evolve and keep up with their consumers in order to achieve success. A great example is how an increasing number of beverage companies are now working to deliver more with their products, with one prominent trend being better-for-you (BFY) drinks. These are beverages that go beyond the scope of mere hydration and provide a solid benefit, such as supporting energy, gut health, cognition, immunity etc. However, in order for it to sell, a drink also needs to taste good, which presents a challenge in itself since the modern consumer is also wary of high sugar levels and artificial sweeteners. As a result, many industry players are now experimenting with natural sweeteners like allulose, stevia, and monk fruit alongside advanced sweetness modulation technologies.
Another major beverage category that is rapidly evolving with shifting consumer trends is that of alcohol. The rising importance of health and wellness has led to an increasing number of younger people drinking less alcohol, with many giving it up altogether. As a result, nearly every major alcohol company has come up with no- and low-alcohol versions of their highly acclaimed brands, making sure they don’t miss out on their share of a market that is becoming more and more established every day. The strategy seems to be paying off, as according to Nielsen, non-alcoholic beer, wine, and spirits collectively surpassed $565 million in sales in 2023, up 35% from the year before. Sales of Guinness 0.0, the zero-alcohol version of the highly beloved Irish stout, surged by nearly 50% between February 2023 and February 2024, putting it among the Best Selling Non Alcoholic Beers in the US.
A recent looming threat for the American beverage industry has emerged in the form of tariffs. President Donald Trump has announced a 25% tariff on all steel and aluminum being imported into the US, eliminating previous country exceptions and exemptions. The blanket tariffs, set to go into effect next month, will have serious consequences for the beverage industry since nearly 75% of all new beverage launches in North America now appear in aluminum cans, according to supplier Crown. An increase in input costs will inevitably lead to a rise in prices for end consumers, causing serious problems for some beverage categories that are already struggling, such as craft beer. A short-term solution could be resorting to alternative packaging materials, such as glass or plastic, but that will undoubtedly come with its ecological concerns and ramifications. Or perhaps, this packaging problem could be a blessing in disguise and lead to some much-needed creative destruction and forever change the industry, since the drinks aisle has always been a hot spot in terms of innovation.
According to data from Janus Henderson’s Global Dividend Index, the global beverage industry paid a total of $9.6 billion in dividends in Q3 2024, up 31.5% YoY and 96% more from the same period in 2019. However, the Food & Beverage index, which represents companies across various sub-industries in the sector, has delivered modest returns over the last year. The index has risen by 4.62% over the last 12 months, against gains of almost 22.9% by the broader market.
Methodology
To collect data for this article, we looked up various companies working in the beverage sector, picked out the ones that pay dividends, and ranked them by their number of hedge fund investors according to the Insider Monkey database, as of Q3 2024. Following are the Best Beverage Dividend Stocks to Buy Now.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A wide-angled shot of a brewery showing the large machinery used for producing malt beverages.
Molson Coors Beverage Company (NYSE:TAP)
Number of Hedge Fund Holders: 34
Molson Coors Beverage Company (NYSE:TAP) is a multinational beverage and brewing giant with a diverse portfolio that expands beyond the beer aisle with energy drinks, non-alcoholic beer, canned cocktails, ready-to-drink coffee, and more.
Molson Coors Beverage Company (NYSE:TAP) struggled in the US market in Q4 2024, primarily due to a challenging macroeconomic environment and the wind-down of the company’s two-decade-long contract agreement with Pabst Brewing Company. Net sales of Molson Coors dropped by almost 2% YoY during the quarter to $2.74 billion but were still above analysts’ estimates by over $31.6 million. The company’s EPS of $1.3 also beat forecasts of $1.13, causing its stock to surge by over 11% since February 10, 2024.
Molson Coors Beverage Company (NYSE:TAP) delivered strong cash generation in 2024, with an annual free cash flow of over $1.24 billion. The beverage giant also returned over $1 billion in cash to shareholders during the year in the form of share buybacks and dividends.
Though the company has witnessed a decrease in financial volumes, Molson Coors Beverage Company (NYSE:TAP)’s core brands remain healthy. According to Circana, in Q4 2024, Coors Light, Miller Lite, and Coors Banquet retained over 80% of their combined volume share gains of the industry versus a year ago, which is an improvement over the second and third quarters.
Overall, TAP ranks 8th on our list of best dividend-paying beverage stocks to buy. While we acknowledge the potential for TAP to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than TAP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
