In this article, we are going to discuss the 10 best dividend-paying beverage stocks to buy.
The American consumer staples industry is currently dealing with an evolving landscape, with a key shift being the heightened influence of health considerations on consumer behavior. Health and wellness are now common themes of interest among the younger generation of consumers and the prevalence of weight-loss drugs has also led to a change in consumer’s eating habits, including both reducing appetite and altering the kind of foods and drinks they want.
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Many industry players have realized that they’ll need to evolve and keep up with their consumers in order to achieve success. A great example is how an increasing number of beverage companies are now working to deliver more with their products, with one prominent trend being better-for-you (BFY) drinks. These are beverages that go beyond the scope of mere hydration and provide a solid benefit, such as supporting energy, gut health, cognition, immunity etc. However, in order for it to sell, a drink also needs to taste good, which presents a challenge in itself since the modern consumer is also wary of high sugar levels and artificial sweeteners. As a result, many industry players are now experimenting with natural sweeteners like allulose, stevia, and monk fruit alongside advanced sweetness modulation technologies.
Another major beverage category that is rapidly evolving with shifting consumer trends is that of alcohol. The rising importance of health and wellness has led to an increasing number of younger people drinking less alcohol, with many giving it up altogether. As a result, nearly every major alcohol company has come up with no- and low-alcohol versions of their highly acclaimed brands, making sure they don’t miss out on their share of a market that is becoming more and more established every day. The strategy seems to be paying off, as according to Nielsen, non-alcoholic beer, wine, and spirits collectively surpassed $565 million in sales in 2023, up 35% from the year before. Sales of Guinness 0.0, the zero-alcohol version of the highly beloved Irish stout, surged by nearly 50% between February 2023 and February 2024, putting it among the Best Selling Non Alcoholic Beers in the US.
A recent looming threat for the American beverage industry has emerged in the form of tariffs. President Donald Trump has announced a 25% tariff on all steel and aluminum being imported into the US, eliminating previous country exceptions and exemptions. The blanket tariffs, set to go into effect next month, will have serious consequences for the beverage industry since nearly 75% of all new beverage launches in North America now appear in aluminum cans, according to supplier Crown. An increase in input costs will inevitably lead to a rise in prices for end consumers, causing serious problems for some beverage categories that are already struggling, such as craft beer. A short-term solution could be resorting to alternative packaging materials, such as glass or plastic, but that will undoubtedly come with its ecological concerns and ramifications. Or perhaps, this packaging problem could be a blessing in disguise and lead to some much-needed creative destruction and forever change the industry, since the drinks aisle has always been a hot spot in terms of innovation.
According to data from Janus Henderson’s Global Dividend Index, the global beverage industry paid a total of $9.6 billion in dividends in Q3 2024, up 31.5% YoY and 96% more from the same period in 2019. However, the Food & Beverage index, which represents companies across various sub-industries in the sector, has delivered modest returns over the last year. The index has risen by 4.62% over the last 12 months, against gains of almost 22.9% by the broader market.
With that said, here are the Best Beverage Stocks that Pay Dividends.
A hand pouring a cool can of a carbonated non-alcoholic beverage with a smiley face on it.
Methodology:
To collect data for this article, we looked up various companies working in the beverage sector, picked out the ones that pay dividends, and ranked them by their number of hedge fund investors according to the Insider Monkey database, as of Q3 2024. Following are the Best Beverage Dividend Stocks to Buy Now.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10. Diageo plc (NYSE:DEO)
Number of Hedge Fund Holders: 26
A global leader in premium drinks, Diageo plc (NYSE:DEO) is a British multinational alcoholic beverage giant with over 200 brands and sales in nearly 180 countries. Scotch whisky is Diageo’s largest segment and it produces over 100 individual scotch brands, including the world’s best-selling Scotch whisky, Johnnie Walker. In fact, the company owns nearly half of the Scotch whiskey stock currently in the maturing stage, which represents a position that is impossible to replicate by competitors.
Diageo plc (NYSE:DEO) is going through tough times and the company’s share price has fallen by more than 25% over the last year. In the first half of FY 2025, sales of the London-based company declined by 0.6% to $10.9 billion. Operating profit also fell to $3.2 bn, down 4.9% YoY. However, the company held or grew a share in 65% of its total net sales in measured markets in the first six months of FY 2025. Diageo also delivered share gains in almost all of its largest markets, including the US, most of Europe, and Greater China.
Diageo plc (NYSE:DEO) remains financially strong and increased its free cash flow by $125 million to almost $1.7 billion in the first six months of FY 2025. The company’s balance sheet will be further strengthened by its decision to divest its 80.4% shareholding in Guinness Ghana to Castel Group for $81 million, as it continues to refine its operating model in Africa. Diageo maintained its half-year dividend at $0.405 per share, reflecting a cautious stance amid market uncertainties.
Oakmark Global Select Fund stated the following regarding Diageo plc (NYSE:DEO) in its Q4 2024 investor letter:
“Diageo plc (NYSE:DEO) is a global producer, distributor and marketer of premium drinks with more than 200 brands and sales in nearly 180 countries. The U.K.-based holding company’s portfolio includes leading brands, such as Johnnie Walker, Guinness, Don Julio, Crown Royal, Smirnoff, Baileys, Casamigos and Captain Morgan. As a market leader, Diageo’s scale provides meaningful competitive advantages in terms of distribution and marketing, which enables the company to invest more than its peers while still generating strong returns on capital. In addition, we like that the company’s portfolio is well diversified by geography and category, which helps mitigate against earnings volatility related to economic cyclicality and shifting consumer preferences. Industry destocking and what we believe is temporary weaker demand have weighed on the share price recently, which provided an attractive re-entry point to invest in this dominant beverage company at a below-average price.”
9. Anheuser-Busch InBev SA/NV (NYSE:BUD)
Number of Hedge Fund Holders: 26
With a staggering 26.9% share of the entire global beer production in 2023, Anheuser-Busch InBev SA/NV (NYSE:BUD) is the Largest Beer Company in the World. The company is responsible for producing some of America’s most iconic beer and beyond beer brands, including Michelob ULTRA, Cutwater Spirits, Stella Artois, Budweiser, Bud Light, and several craft beer brands.
Anheuser-Busch InBev SA/NV (NYSE:BUD) grew its total revenue by 2.1% YoY in Q3 2024, while revenue per hectoliter also surged by 4.6% YoY due to its ongoing premiumization efforts. The company also witnessed a volume increase in 50% of its markets internationally, but its overall volume still declined by 2.4% YoY due to a soft consumer environment in China and Argentina, highlighting the risks associated with aggressive geographical diversification. The brewing giant also remains committed to returning value to its shareholders and recently announced a $2 billion share buyback program, up from its $1 billion share buyback in 2023. Anheuser-Busch InBev SA/NV (NYSE:BUD) distributed a €0.82 per share annual dividend in June 2024 and is included among the Best Beverage Dividend Stocks to Buy Now.
Anheuser-Busch InBev SA/NV (NYSE:BUD) continues to dominate the rapidly expanding non-alcoholic beer category and gained a market share of NA beer in over 60% of its key markets in Q3 of 2024, with Corona Cero more than doubling both volumes and revenues. Corona Cero was the official beer sponsor of the Summer Olympics 2024, which helped activate the brand at scale across more than 40 markets around the globe.
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