Time To Get Drunk On Dividends? – Diageo plc (ADR) (DEO), Anheuser-Busch InBev NV (ADR) (BUD), Brown-Forman Corporation (BF.B)

Recently quarter results showed that Anheuser’s earnings were down 5% year over year, despite revenue being up 8%. Forward guidance was also bleak for the company, as it expects weakness in its key market, Brazil. Anheuser is the market share leader in the country with 69% of the market. The big news of late for Anheuser-Busch InBev NV (ADR) (NYSE:BUD) includes its acquisition of the 50% of Modelo that it does not already own. The transaction woud establish Crown as a fully owned entity of Constellation, and provides Constellation with independent brewing operations, Modelo’s full profit stream from all United States sales and rights in perpetuity to the Modelo brands distributed by Crown in the United States.

Molson Coors Brewing Company (NYSE: TAP) also has just over half the long-term debt to equity ratio (43%) as Anheuser’s 95%. All-in-all, Molson has over sixty-five brands that include low-priced options and craft brews. The company has implemented various cost saving initiatives that include closing underperforming breweries to do away with inefficiencies  The company also has a synergy program named Resources for Growth Two, which has helped the company save $172 million over the last three years. Part of the Resources for Growth strategy includes combining its UK and Ireland business with its newly acquired Central Europe organization for a singe operating unit in Europe.

While consolidating certain underperforming assets, Molson Coors Brewing Company (NYSE: TAP) has also been upping it exposure to high growth markets. This includes acquiring Sharp’s Brewery and Doom Bar brands in 2011, which added the Modelo brands to its U.K. portfolio. Its acquisition of nine StarBev breweries in 2012 enhanced its portfolio with premium brands of StarBev and gave the company expansion opportunities to the emerging markets of the Czech Republic, Hungary, Romania, and Bulgaria. Molson Coors Brewing Company (NYSE: TAP) has also been a leader in returning capital to shareholders, having increased its dividend payment at a 15% compounded annual growth rate for the last five years (read more about this turnaround stock and others).

These two companies also have solid dividend payout ratios:

Beam 33%
Brown-Forman 42%
Diageo 42%
Anheuser-Busch 34%
Molson Coors 52%

It appears that both of the highest dividend yielding alcoholic beverage companies, Diageo and Molson-Coors, might also be two of the industry’s best picks. Both are the cheapest for their relative segments, and have been looking to tap the emerging markets for growth opportunities. Diageo plc (ADR) (NYSE: DEO) yields 2.4% and Molson 2.6%, while each have payout ratios of less than 55%.