Published Mon, 15 Apr 2019 07:32:46 -0400 on Seeking Alpha
I've been bullish on Constellation Brands (STZ) for a couple of years now. Constellation climbed very high up my rankings in the consumer packaged goods space with its recent dividend growth results. Since initiating its dividend in 2015 at $0.31/share on a quarterly basis, management has given investors very generous annual increases that have quickly bumped the quarterly payments up to $0.74. This dividend growth represents a 24.30% CAGR over the four-year period since STZ began paying its dividend. In an area of the market that has generally lagged the broader averages and posted slowing growth, what's not to like about a nearly 25% dividend growth CAGR?
Well, I hate to say it, but Constellation Brands just morphed from one of my favorite dividend growth stocks to a notable disappointment with the announcement of its latest dividend increase. After four years of impressive, double-digit increases, last week the management announced a token $0.01/share increase to $0.75.
This increase was just 1.35%. Considering the fact that STZ's dividend yield is 1.55% at its current $193.3 share price, a low-single-digit dividend increase is not an acceptable raise. It's below the current inflation rate. Even the high yielders that I own must increase their dividends at a rate that exceeds inflation.
Because of STZ's lackluster increase, I've trimmed down on my position and the remaining shares that I hold. On Friday, I sold 1/3 of my STZ position at $190.03. I got rid of the shares... Read more