What are we looking for?
Sustainable dividends from food-industry players offering plant-based “meat.”
The screen
Beyond Meat Inc. – with its plant-based protein designed to taste like meat – continues to command consumer and investor attention. Shares of the company behind the Beyond Burger have soared 539 per cent since the May initial public offering.
Plant-based burgers will likely keep gaining popularity, although early market entrants may falter. Far better, we think, for dividend investors to focus on food-industry leaders with strong existing businesses bolstered by meatless offerings – and not businesses entirely dependent on them.
Among U.S. and Canadian food makers and sellers, we pinpointed meatless market participants with growth potential and dividends. We then applied our TSI Dividend Sustainability Rating System; it awards points based on key factors:
- One point for five years of continuous dividend payments – two points for more than five;
- Two points if it has raised the payment in the past five years;
- One point for management’s commitment to dividends;
- One point for operating in non-cyclical industries;
- One point for limited exposure to foreign currency rates and freedom from political interference;
- Two points for a strong balance sheet, including manageable debt and adequate cash;
- Two points for a long-term record of positive earnings and cash flow sufficient to cover dividend payments;
- One point if the company is an industry leader.
Companies with 10 to 12 points have the most secure dividends, or the highest sustainability. Those with seven to nine points have above-average sustainability; average sustainability, four to six points; and below average sustainability, one to three points.
More about TSI Network
TSI Network is the online home of The Successful Investor Inc. – the group of widely followed Canadian investment newsletters by editor and publisher Pat McKeough. They include our award-winning flagship newsletter, The Successful Investor. The TSI Best ETFs for Canadian Investors is the latest. TSI Network is also affiliated with Successful Investor Wealth Management.
What we found
Our TSI Dividend Sustainability Rating System generated six stocks. Unlike Beyond Meat, they pay dividends. U.S. chicken giant Tyson Foods Inc. recently unveiled plant-based nuggets. Switzerland’s Nestlé SA launched its own plant-based burgers in Europe, including at 1,500 McDonald’s outlets in Germany. Restaurant Brands International Inc.’s Tim Hortons sells Beyond Meat breakfast sandwiches across Canada, while in the United States its Burger King chain serves the meatless burgers of privately held Impossible Foods Inc. Canada’s Maple Leaf Foods Inc. keeps expanding in non-meat products, including its Lightlife Burger. A&W Revenue Royalties Income Fund licenses its trademarks to A&W Food Services of Canada Inc. – the privately held operator of the fast-food chain – and also benefits from the chain’s successful promotion of the Beyond Meat Burger. And finally, Loblaw Cos. Ltd. keeps spurring sales with its President’s Choice meatless proteins.
We advise investors to do additional research on any investments we identify here.
Scott Clayton, MBA, is senior analyst for TSI Network and associate editor of TSI Dividend Advisor.
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Scott Clayton