Mexican beer growth leads Constellation Brands to pay first dividend
Constellation Brands plans to pay a quarterly dividend for the first time since the alcoholic beverage company went public in 1973, a move to join its peers in the shareholder-friendly payout that took over 40 years to achieve.
The maker of Corona beers and Svedka vodka had long been an anomaly among publicly traded alcoholic beverage companies by declining to pay a dividend. U.S.-based companies like Brown-Forman and Molson Coors (TAP), as well as industry giants abroad including Diageo, Pernod Ricard and Anheuser-Busch (BUD) have long paid dividends to investors.
Constellation’s (STZ) investors can thank the consistent cash flow that the company says it now generates from beer, wine and spirits. Constellation spent billions to acquire the U.S. assets of Grupo Modelo, a deal that was completed in 2013 and gave the company full control of the U.S. imports of Corona and Modelo Especial. Since then, Constellation has hauled in a lot more revenue and profits from the beer business, which had previously been a joint venture. Constellation is now the third largest producer and marketer of beer in the U.S., though it also sells wines like Robert Mondavi and Kim Crawford and a few, mostly small, spirits brands.
The company intends to pay an initial quarterly cash dividend of 31 cents per Class A share on May 22. Chief Financial Officer Bob Ryder hinted future increases to the dividend could occur based on the company’s growth in net income and free cash flow. Constellation Brands on Thursday also announced net sales leapt 24% for fiscal 2015 to $6 billion, with net income climbing 39%. The Mexican beer business fueled the growth, with wine and spirits sales only increasing 1%.
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