Earlier this month, we posted the top 100 dividend stocks; since then we have looked a bit deeper into some of the stocks that looked the most promising. Some of them are truly great potential additions to a passive income portfolio, at least on the surface.
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Ticker Name Current Dividend Yield 5 year Dividend Growth 1 year Dividend Growth TAP Molson Coors Brewing Co 2.22 11.03 17.39
Molson Coors has a dividend yield smaller than many others that we’ve looked at in the past -- barely over 2% -- but its growth in recent years has been spectacular, to say the least; if it can keep things up, the dividend yield will increase quickly as well. The million dollar question, of course, remains whether the company can keep up such high growth.
Ticker Name Sales Growth (1 year) Sales Growth (5 year) Earnings growth P/E ratio Margins growth Payout ratio Return on Equity Debt to Capital Ratio TAP Molson Coors Brewing Co 7.32 -5.18 88.98 12.65 N/A 23.26 10.97 0.24
Most of the numbers cited here are very impressive and would give TAP a great grade, but in this specific case, I’m very happy to have added a new criterion -- 5-year sales growth -- and seeing that sales have diminished over the past five years is worrying, no doubt. Sure, the company has gone through a merger, difficult economic circumstances and other challenging moments, but that number still sticks out and is not enough for me -- despite the impressive earnings growth, the very interesting payout ratio and very reasonable P/E ratio. I do think the company has solid metrics, but that 5-year sales number is worrying.
Ticker Name Price TAP Molson Coors Brewing -100 45.05
In technical terms, there is no doubt that the stock does not look very attractive and its trend analysis score is as bad as it gets: -100.
Industry Metrics & Fit Within Your Portfolio
Molson Coors Brewing Co is part of a very competitive industry, and I do not really see a day where TAP will be able to improve its margins that much. It is the result of a huge merger -- and that could pay off to some extent -- but prices remain very inelastic for TAP, and I do not see things getting much easier. That being said, sales and profits should be recession-proof and remain steady no matter how the economy goes (more or less) ... so it is a good fit for most dividend portfolios.
If I compare Molson Coors Brewing Co. to other dividend stocks such as Verizon (VZ), Coca-Cola (KO), Pepsi (PEP), McDonald’s (MCD) or others, I would consider the stock to be one around the average. It does have high potential, but its current dividend yield is not as high as some of these others, and I remain nervous about its long-term sales.
Do you agree?
No positions on Molson Coors Brewing Co.