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Heineken: Seeking Long-Term Beer Dividends

Published Fri, 17 Feb 2017 13:34:55 -0500 on Seeking Alpha

With an excellent track record of shareholder returns the alcohol industry should be high on the list of suitable hunting grounds for long-term investors. According to Credit Suisse it was the highest performing industry between 1900 and 2015 in the United Kingdom. A £1 investment made at the turn of the twentieth century would have been worth nearly £245,000 at the end of 2015. That's equivalent to compounded annual returns of 11.5%.
As one of the largest alcohol companies in the world Dutch brewer Heineken (OTCQX:HEINY)(OTCQX:HINKF) should therefore be a logical choice for investors to consider. Given that the company reported annual results this week then now seems a good time to take a look at the stock.
Brand Equity, Quality Profits
On the face of it it's very easy to construct a long-term buy-and-hold case for a company like Heineken. It's one of the largest brewers in the world by volume; number two in fact after last year's merger of SABMiller and Anheuser-Busch InBev (NYSE: BUD). Humans have been drinking beer for centuries. They've been drinking Heineken since the 1860s. The company has something like 250 brands; some of them internationally famous, some of them regional mark share leaders (e.g. Soproni in Hungary, Zlatý Ba┼żant in Slovakia, etc).

(Heineken's International Brands)
The company's size means it has a formidable marketing budget. Consumers have been exposed to years of advertising through... Read more