As investors continue grappling with U.S. market slowdown concerns, the beverage industry contains four stocks that have outperformed the Standard & Poor’s 500 Index over the past six months and offer dividend yields of at least 2.1% according to the All-in-One Screener.
Beverage industry overview
The beverage industry includes companies that manufacture and sell drinks and other potable products. The industry contains two categories: alcoholic beverages and nonalcoholic beverages. The former includes wineries, distilleries and breweries, while the latter includes companies that produce soda, energy drinks and fruit juice.
While the industry is highly competitive, beverage companies are not as cyclical as restaurants or companies that produce luxury goods. Even during market downturns, consumers are more likely to cut down on high-end meals and stick with the essential beverages.
PepsiCo leads gains among beverage companies
On Thursday, a day where the broad indexes struggled to recover from two major tumbles over the past two days, shares of PepsiCo Inc. (PEP, Financial) soared over 3% on the heels of third-quarter results that increased management’s confidence about meeting or exceeding the full-year organic growth rate target of 4% according to CEO Ramon Laguarta.
According to the Screener results, PepsiCo has outperformed the S&P 500 by 12.15% during the past six months. The company’s dividend yield of 2.7% outperforms 56.45% of global competitors.
GuruFocus ranks PepsiCo’s profitability 9 out of 10 on several positive investing signs, which include expanding profit margins and consistent revenue growth over the past 10 years. Despite this, the company’s five-star business predictability rank is on watch as earnings growth rates have decelerated over the past several years.
Other beverage companies that have a dividend yield of at least 2.1% and a positive six-month return relative to S&P 500's return are Anheuser-Busch InBev SA/NV (BUD, Financial), Coca-Cola European Partners PLC (CCEP, Financial) and The Coca-Cola Co. (KO, Financial).
Anheuser-Busch InBev
Belgium-based Anheuser-Busch InBev brews a wide range of branded beers, including Budweiser and Bud Light. GuruFocus ranks the company’s profitability 7 out of 10: Even though operating margins underperform 90.09% of global competitors, Anheuser-Busch’s net margin and return on equity outperform over 76.7% of global companies manufacturing alcoholic beverages.
According to the Screener, Anheuser-Busch InBev outperformed the S&P 500 benchmark by 10.01% over the past six months. The company’s dividend yield is 2.22%.
Gurus with large holdings in Anheuser-Busch include Ken Fisher and Jim Simons (Trades, Portfolio)’ Renaissance Technologies.
Coca-Cola European Partners
U.K.-based Coca-Cola European Partners purchases concentrates and syrups from other beverage manufactures under a license, then produces, packages and distributes the beverages to retailers. According to GuruFocus, the company’s operating margin and return on assets are outperforming over 70% of global competitors. Despite this, Coca-Cola European Partners’ three-year revenue decline rate of 4.3% underperforms 73.40% of global peers.
Coca-Cola European Partners has outperformed the S&P 500 by 10.22% according to the Screener. The company has a divided yield of 2.37%.
Coca-Cola
Coca-Cola, the Atlanta-based beverage giant, produces a wide range of nonalcoholic beverages. Brands include Diet Coke, Fanta, Sprite, Minute Maid, Powerade and Dasani.
GuruFocus ranks Coca-Cola’s profitability 8 out of 10: Even though the company’s three-year revenue decline rate of 9.7% underperforms 82.98% of global competitors, its operating margin is near a 10-year high of 31.71% and outperforms 94.79% of global peers. Additionally, Coca-Cola’s business predictability rank is a perfect five stars as revenue and earnings growth have overall remained strong and consistent over the past 10 years.
Warren Buffett (Trades, Portfolio)’s Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B, Financial) has not released its third-quarter portfolio as the deadline is 45 days after the quarter ends. As of the second quarter, Buffett’s conglomerate owns 400 million shares.
Disclosure: No positions.
Read more here:
- US Mega-Caps Fall to Begin 4th Quarter on Weak Manufacturing Data
- 7 Chinese Net-Nets for China’s 70th Anniversary
- 5 Retail Stalwarts to Consider During the 4th Quarter
Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.
