Summer is in full swing. The weather is getting warmer, and that means July 4 is almost here. Americans are preparing to serve all the traditional food and drinks and spend time with friends and family.
This is a great time to bone up on companies that profit from summer holidays. If grilling and drinking are on the docket, Hormel (NYSE: HRL), Anheuser Busch Inbev (NYSE: BUD) and Molson Coors (NYSE: TAP) come to mind. These Fourth of July stocks will certainly serve up profits for your portfolio.
Hormel, Anheuser Busch, and Molson Coors have a few things in common. They are highly profitable companies in the consumer goods sector. They sell many of the food and adult beverage products which will likely be consumed in large numbers this weekend. And, they pay hefty dividends to shareholders.
A Doggone Great Fourth of July Stock
Hormel is a food giant, which most investors probably associate with its flagship Spam and Jennie-O turkey brands. While these probably aren’t on the menu for too many Americans this weekend, Hormel has a large product portfolio, including its namesake chili and its recently acquired Applegate Farms brand.
Applegate Farms makes of all-natural deli meats, hot dogs, bacon and sausage without the use of antibiotics, hormones or artificial ingredients. Hormel acquired Applegate for $775 million last year.
Last quarter, Hormel earned $215 million, or $0.40 per share, on $2.3 billion of revenue. Earnings climbed 20% from the year-earlier quarter and set a record for the company. Profits in Hormel’s refrigerated foods business increased 13% from the same quarter last year, thanks to Applegate. This segment now makes up nearly half of Hormel’s total revenue, and growth from Applegate should provide a significant tailwind.
Hormel has a long track record of creating shareholder value. It grew earnings-per-share by 12% each year for the past five years, and it has increased its dividend for 50 years in a row. Over the past five years, Hormel has lifted its dividend payout by an average of 17% per year.
For Americans who love chili dogs, grilling up an all-natural Applegate hot dog with some Hormel chili will be just the ticket.
Beer for a Hot Summer Holiday
Meanwhile, to wash down that chili dog, Americans of legal drinking age will likely be imbibing on an adult beverage or two. That’s where Anheuser-Busch and Molson Coors come in handy.
Anheuser-Busch is truly a beer behemoth, with more than 200 brands in its portfolio. Of these brands, 19 rake in at least $1 billion in sales every year. Its domestic brands include Budweiser and Bud Light, while its international brands include Stella Artois, Corona, Beck’s, Skol, and Brahma, plus many more.
AB-InBev has a thirst for growth, which it has quenched through acquisitions. Investors likely recall the $52 billion deal that combined InBev and Anheuser-Busch back in 2008. In 2013, AB-InBev purchased the remaining portion of Groupo Modelo that it didn’t already own, for $20.1 billion.
This has translated into significant growth. AB-InBev’s earnings before interest, taxes, depreciation, and amortization (EBITDA) grew from $13.8 billion in 2010, to $16.8 billion last year.
Plus, there is still the massive $108 billion pending merger between AB-InBev and SABMiller (OTC: SBMRY), which would combine the top-two beer companies in the world. This will be key to AB-InBev growing its profits, and consequently, its dividends. Last year, it increased its dividend by 45%. Based on its current share price, the stock yields 3.7%.
Fourth of July Stocks: Celebrate the Dividends
Molson Coors is a much smaller beer company, but it has a wide portfolio of brands including Coors, Coors Light, Molson Canadian, Blue Moon, and Carling. Molson Coors’ sales decreased 2.2% in constant currency last year, but it had a lot of success in its international operations. Sales in Europe and other international markets rose 15% last year. Molson Coors offers investors a 1.6% dividend.
Hormel, AB-Inbev, and Molson Coors have rewarded shareholders with enticing stock price gains and solid dividend yields. Each of these three stocks has outperformed the S&P 500 over the past year, by a significant margin. Hormel, AB-Inbev, and Molson Coors have increased in value by 25%, 6%, and 44%, respectively, over the past one year. Meanwhile, the S&P 500 is flat over the last 12 months.
These Fourth of July stocks and their dandy dividends could be a good way for investors to profit from this holiday’s festivities.
This Is Making Ordinary People Rich
Ordinary people across America are getting insanely rich. Take Gladys Holm. She never earned more than $15,000 a year as a secretary. But by making one simple move, she was able to leave an $18 million fortune to a children’s hospital when she died. There’s many more just like her.