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AB-InBev Has Ruined Its Dividend

Published Mon, 17 Jul 2017 09:18:05 -0400 on Seeking Alpha

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AB-InBev (BUD) has – as promised – become a dominant force in the global beverage industry. The company’s ability to produce cash has always been a huge consideration of investors as stocks like BUD tend to operate a bit like utilities in the sense that capital returns are tremendously important to shareholders. To that end, BUD has ramped its dividend spending since the company was formed several years ago and in this article, I’ll quantify what it’s been able to do and what the future may look like.
I’ll be using data from Morningstar and note that we’ll begin with 2010, the first full year the company operated in its current form.
Here’s a quick look at the per-share payout BUD has produced over that time frame, and as expected, growth is quite impressive.

The dividend began as just an annual payout that was successively increased by leaps and bounds until BUD went to a more traditional payout schedule a couple of years ago. Starting from nothing at the time of the merger between Interbrew, AmBev and Anheuser Busch in 2008 - forming the company we know today - BUD has its payout up to four bucks per share annually, tremendous growth by any measure. But if we look at each year’s increase, we can also see what I believe is an issue going forward from here, and that is a lack of available cash to continue these increases.

These early increases are huge but quite irregular as well. We... Read more