Up to date on March eighth, 2025 by Felix Martinez
The Dividend Aristocrats are a gaggle of 69 firms within the S&P 500 Index which have elevated their dividends for 25+ consecutive years.
Inside the Dividend Aristocrats are numerous varieties of shares with differing yields. A number of the Dividend Aristocrats have greater yields, however these high-yielders are inclined to develop their dividends at a decrease charge every year.
On the identical time, there are Dividend Aristocrats with low yields. Whereas these could look unappealing on the floor, they usually present greater dividend development ranges from 12 months to 12 months. An instance is Brown-Forman (BF.B), a Dividend Aristocrat that has elevated its dividend for 41 consecutive years.
There are at present 69 Dividend Aristocrats, together with Brown-Forman. You may obtain an Excel spreadsheet of all 69 Dividend Aristocrats (with metrics like dividend yields and price-to-earnings ratios) by clicking the hyperlink beneath:
Disclaimer: Certain Dividend just isn’t affiliated with S&P International in any approach. S&P International owns and maintains The Dividend Aristocrats Index. The data on this article and downloadable spreadsheet relies on Certain Dividend’s personal overview, abstract, and evaluation of the S&P 500 Dividend Aristocrats ETF (NOBL) and different sources, and is supposed to assist particular person traders higher perceive this ETF and the index upon which it’s primarily based. Not one of the info on this article or spreadsheet is official knowledge from S&P International. Seek the advice of S&P International for official info.
Brown-Forman has paid a dividend for 80 years. Due to its defensive enterprise mannequin, the corporate sometimes gives excessive dividend will increase every year, even throughout recessions.
This text will focus on Brown-Forman’s development prospects, valuation, and outlook.
Enterprise Overview
Jack Daniel’s Tennessee Whiskey bought its begin all the best way again in 1865 when Jack Daniel bought Cave Spring Hole. The next 12 months, he registered the Jack Daniel Distillery, which is right now America’s oldest registered distillery.
Brown-Forman has a big product portfolio centered on whiskey, vodka, and tequila. Its most well-known model is its flagship, Jack Daniel’s whiskey. Different well-liked manufacturers embody Herradura and El Jimador tequila and Finlandia vodka.
Brown-Forman reported revenues of $1.1 billion for its third quarter (fiscal 2025) earnings outcomes. The corporate’s third quarter earnings noticed a 1% decline in Q2 internet gross sales to $1.1 billion, although natural gross sales grew 3%. Working revenue rose 1% to $341 million, and EPS elevated 9% to $0.55. For the primary half of fiscal 2025, internet gross sales dropped 5% to $2 billion, working revenue fell 7% to $622 million, and EPS declined 3% to $0.96. CEO Lawson Whiting expects development within the second half of the 12 months regardless of financial challenges.
Gross sales declines had been pushed by the divestitures of Finlandia and Sonoma-Cutrer, together with decrease volumes throughout key markets. Whiskey gross sales remained secure on account of Woodford Reserve and Outdated Forester, however Tequila and ready-to-drink merchandise noticed declines. U.S. internet gross sales fell 7% on account of weaker Jack Daniel’s and Korbel gross sales, whereas worldwide and rising markets confirmed blended efficiency.
Gross revenue declined 8% on account of excessive stock and value fluctuations, however decrease bills helped offset losses. Brown-Forman elevated its dividend for the forty first consecutive 12 months. The corporate expects 2%-4% natural development in internet gross sales and working revenue however stays cautious about financial and geopolitical dangers.
Supply: Investor Presentation
Development Prospects
Brown-Forman has a powerful development monitor document; the corporate even elevated its earnings-per-share over the past monetary disaster, as demand for alcohol just isn’t particularly cyclical. Historic earnings-per-share had been pushed by a mixture of a number of elements, together with income development, rising margins, and the influence of a declining share rely.
As a result of Brown-Forman owns robust manufacturers and is energetic within the tremendous and ultra-premium alcoholic drinks markets, which see constant market development, Brown-Forman ought to have the ability to preserve its income development going ahead.
This has been an vital development issue for Brown-Forman previously. Brown-Forman’s Jack Daniels model and its American super-premium whiskeys proceed to develop across the globe.
Greater general gross sales enable for margin will increase on account of higher economies of scale, which makes the corporate extra environment friendly general, and positively impacts its internet earnings development charge.
As well as, Brown-Forman has aggressively repurchased shares previously decade, which provides some extra development to its backside line. Going ahead, there may be loads of development potential left as the corporate additional expands its product line inside and out of doors its flagship Jack Daniels model.
Moreover, the corporate will buy development by means of acquisitions, for instance, its current buy of the Diplomático Rum model. This buy launched Brown-Forman into the rising super-premium+ rum class. Diplomático Rum is a super-premium rum from Venezuela and is distributed in over 100 nations.
Supply: Investor Presentation
We’re forecasting 6% annual earnings-per-share development over the following 5 years.
Aggressive Benefits & Recession Efficiency
Brown-Forman has many aggressive benefits. Its well-known manufacturers yield vital pricing energy. Due to its international scale, it has a extremely worthwhile enterprise with low manufacturing and distribution prices. These qualities assist Brown-Forman generate constantly excessive returns on invested capital.
Brown-Forman can be very immune to recessions. That is typical amongst alcohol shares, as their merchandise are typically consumed in larger quantity when financial occasions are robust. One might argue that alcohol producers carry out effectively throughout recessions.
Brown-Forman’s earnings-per-share by means of the Nice Recession are proven beneath:
2007 earnings-per-share of $0.76
2008 earnings-per-share of $0.77 (1.3% enhance)
2009 earnings-per-share of $0.82 (6.5% enhance)
2010 earnings-per-share of $0.95 (15.9% enhance)
As you may see, the corporate grew its earnings per share yearly by means of the Nice Recession. This uncommon accomplishment demonstrates the corporate’s defensive enterprise mannequin.
Spirits producers reminiscent of Brown-Forman are among the many most recession-resistant companies.
Valuation & Anticipated Returns
Based mostly on our estimate for 2025 earnings-per-share of $1.80 and a present share value close to $36, Brown-Forman shares are at present buying and selling at a P/E ratio 20.
This can be a honest a number of, even contemplating the power of Brown-Forman’s enterprise. We estimate a good worth P/E ratio of twenty-two.
If shares had been to extend to 22 occasions earnings, this means the potential for a 1.5% valuation tailwind over the following 5 years. On this foundation, the valuation seems honest.
A robust earnings development charge of 6% and a pair of.5% dividend yield will assist enhance shareholder returns. Total, we estimate annual returns of 10% over the following 5 years.
Remaining Ideas
Brown-Forman has a dominant place in its core product classes. Its flagship Jack Daniel’s model ought to proceed to steer the whiskey business, with excessive development from its smaller whiskey manufacturers and tequilas. Rising markets are additionally an interesting development catalyst, and naturally, the dividend development streak is enviable.
Brown-Forman is an effective instance of an important enterprise buying and selling at an exceptionally honest valuation. The corporate has a stable dividend and really robust enterprise, the shares look notably compelling for buy proper now.
Associated: My High 10 Purchase & Maintain Eternally Shares.
Moreover, the next Certain Dividend databases comprise essentially the most dependable dividend growers in our funding universe:
In the event you’re in search of shares with distinctive dividend traits, take into account the next Certain Dividend databases:
The most important home inventory market indices are one other stable useful resource for locating funding concepts. Certain Dividend compiles the next inventory market databases and updates them month-to-month:
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