Our analysis is based on comparing Constellation Brands, Inc. with the following peers – Brown-Forman Corporation Class B, Diageo plc Sponsored ADR, Molson Coors Brewing Company Class B, Boston Beer Company, Inc. Class A, Willamette Valley Vineyards, Inc. and Compania Cervecerias Unidas S.A. Sponsored ADR (BF.B-US, DEO-US, TAP-US, SAM-US, WVVI-US and CCU-US).
Constellation Brands, Inc.’s dividend yield is 0.97 percent and its dividend payout is 25.35 percent. This compares to a peer average dividend yield of 1.35 percent and a payout level of 25.82 percent. This relatively lagging dividend performance would normally spur the company to consider some dividend action going forward – but for the fact that the current dividend quality score of 25 out of a possible score of 100 looks weak.
Dividend Quality Overview
- Over the last twelve months (prior to November 30, 2016), STZ-US paid a medium quality dividend, which represents a yield of 0.92% at the current price.
- Only one dividend was paid over the last five years — it was also of low quality.
- The ending cash balance is less than the last full year dividend payment and cannot be relied on to cushion any significant reduction of cash flows in the future.
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Over the last twelve months (prior to November 30, 2016), STZ-US paid a medium quality dividend.
The source of the company’s cash to support the dividend paid over the last twelve months is operating cash flow (coverage of 5.80x), investing cash flow (coverage of -8.36x), issuance cash flow (coverage of 2.61x) and twelve-month prior cash (coverage of 1.64x), for a total dividend coverage of 1.66x.
STZ-US‘s issuance cash flow includes outflows from net share buybacks (coverage of -1.18x). Thus, the total coverage including share buybacks is 2.84x, which reflects our assumption that the cash paid for share buybacks is discretionary and could instead be used to pay dividends.
These coverage ratio factors imply that the firm’s net cash inflow from issuance was required (in addition to operating and investment cash) to pay the dividend, which suggests a medium dividend quality.
|Dividend Yield (%)||0||0||0||0||0.86||0.97|
|Dividend Payout (%)||0||0||0||0||26.7||25.35|
A complete list of metrics and analysis is available on the company page.
Constellation Brands, Inc. engages in the production, marketing and distribution of beverage alcohol products. It operates through the following segments: Beer, Wine and Spirits, and Corporate Operations and Other. The Beer segment includes Coreona Extra, Corona Light, Modelo Especial, Pacifico, Negra Modelo, Victoria, and Ballast Point brands. The Wine and Spirits segment produces and markets premium wine including table wine, sparkling wine, and dessert wine; and imports SVEDKA Vodka. The Corporate Operations and Other segment comprises of traditional corporate-related items including executive management, corporate development, corporate finance, human resource, internal audit, investor relations, legal, public relation, and information technology. The company was founded by Marvin Sands in 1945 and is headquartered in Victor, NY.
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