Up to date on March eighth, 2025 by Felix Martinez
The Dividend Aristocrats are a gaggle of 69 corporations within the S&P 500 Index which have elevated their dividends for 25+ consecutive years.
Throughout the Dividend Aristocrats are varied forms of shares with differing yields. A number of the Dividend Aristocrats have larger yields, however these high-yielders are inclined to develop their dividends at a decrease charge annually.
On the identical time, there are Dividend Aristocrats with low yields. Whereas these might look unappealing on the floor, they usually present larger dividend development ranges from yr to yr. An instance is Brown-Forman (BF.B), a Dividend Aristocrat that has elevated its dividend for 41 consecutive years.
There are presently 69 Dividend Aristocrats, together with Brown-Forman. You’ll be able to obtain an Excel spreadsheet of all 69 Dividend Aristocrats (with metrics like dividend yields and price-to-earnings ratios) by clicking the hyperlink under:
Disclaimer: Certain Dividend just isn’t affiliated with S&P World in any means. S&P World owns and maintains The Dividend Aristocrats Index. The data on this article and downloadable spreadsheet is predicated 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 buyers 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 information from S&P World. Seek the advice of S&P World 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 annually, even throughout recessions.
This text will talk about Brown-Forman’s development prospects, valuation, and outlook.
Enterprise Overview
Jack Daniel’s Tennessee Whiskey received its begin all the best way again in 1865 when Jack Daniel bought Cave Spring Hole. The next yr, he registered the Jack Daniel Distillery, which is in the present day America’s oldest registered distillery.
Brown-Forman has a big product portfolio targeted on whiskey, vodka, and tequila. Its most well-known model is its flagship, Jack Daniel’s whiskey. Different fashionable manufacturers embrace 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 web 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, web 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 yr 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 steady attributable to Woodford Reserve and Previous Forester, however Tequila and ready-to-drink merchandise noticed declines. U.S. web gross sales fell 7% attributable to weaker Jack Daniel’s and Korbel gross sales, whereas worldwide and rising markets confirmed blended efficiency.
Gross revenue declined 8% attributable to excessive stock and value fluctuations, however decrease bills helped offset losses. Brown-Forman elevated its dividend for the forty first consecutive yr. The corporate expects 2%-4% natural development in web gross sales and working revenue however stays cautious about financial and geopolitical dangers.
Supply: Investor Presentation
Development Prospects
Brown-Forman has a robust development monitor file; the corporate even elevated its earnings-per-share over the last 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 components, together with income development, rising margins, and the affect of a declining share rely.
As a result of Brown-Forman owns sturdy manufacturers and is energetic within the tremendous and ultra-premium alcoholic drinks markets, which see constant market development, Brown-Forman ought to be capable of maintain its income development going ahead.
This has been an essential development issue for Brown-Forman prior to now. Brown-Forman’s Jack Daniels model and its American super-premium whiskeys proceed to develop across the globe.
Increased total gross sales permit for margin will increase attributable to higher economies of scale, which makes the corporate extra environment friendly total, and positively impacts its web earnings development charge.
As well as, Brown-Forman has aggressively repurchased shares prior to now decade, which provides some further 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 outdoors its flagship Jack Daniels model.
Moreover, the corporate will buy development via acquisitions, for instance, its latest 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 important 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 better quantity when financial occasions are powerful. One might argue that alcohol producers carry out nicely throughout recessions.
Brown-Forman’s earnings-per-share via the Nice Recession are proven under:
2007 earnings-per-share of $0.76
2008 earnings-per-share of $0.77 (1.3% improve)
2009 earnings-per-share of $0.82 (6.5% improve)
2010 earnings-per-share of $0.95 (15.9% improve)
As you may see, the corporate grew its earnings per share yearly via the Nice Recession. This uncommon accomplishment demonstrates the corporate’s defensive enterprise mannequin.
Spirits producers resembling Brown-Forman are among the many most recession-resistant companies.
Valuation & Anticipated Returns
Primarily based on our estimate for 2025 earnings-per-share of $1.80 and a present share worth close to $36, Brown-Forman shares are presently buying and selling at a P/E ratio 20.
This can be a truthful 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 truthful.
A robust earnings development charge of 6% and a couple of.5% dividend yield will assist enhance shareholder returns. General, we estimate annual returns of 10% over the following 5 years.
Last Ideas
Brown-Forman has a dominant place in its core product classes. Its flagship Jack Daniel’s model ought to proceed to guide 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 efficient instance of a terrific enterprise buying and selling at an exceptionally truthful valuation. The corporate has a stable dividend and really sturdy enterprise, the shares look significantly compelling for buy proper now.
Associated: My Prime 10 Purchase & Maintain Perpetually Shares.
Moreover, the next Certain Dividend databases comprise probably the most dependable dividend growers in our funding universe:
In case you’re on the lookout for shares with distinctive dividend traits, think about the next Certain Dividend databases:
The foremost 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:
Thanks for studying this text. Please ship any suggestions, corrections, or inquiries to help@suredividend.com.
