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A toast to Corby’s high yield dividend  

The shares are slow, steady performers and the dividend reliable and substantial.

In this challenging environment, it is hard to know what to worry about first: Rising interest rates or falling stock markets. A looming recession or a resurgent pandemic. Take your pick.

If it’s all enough to drive you to drink, a better option for investors are the companies that make the drink. That’s a good way to benefit from rising share prices, hefty dividends and defensive consumer stocks in a time of uncertainty.  

One company that fits this profile is Toronto’s Corby Spirit & Wine Ltd. (TSX: CSW. A, CSW.B), a below the radar company with Canadian roots that go back more than 160 years. It is a solid performer offering stability, slow, but steady growth and a satisfying dividend with a yield that beats the likes of Canada’s big banks.

The shares hit a low of $14.88 in October, 2020 as lockdowns closed bars and restaurants and they rebounded to a high of $19.98 in April, 2021. Since then they have pulled back. At the time of writing, the voting A shares were trading at $16.95 for a 1% gain year-to-date. That compares with a loss of 13% for the TSX Composite Index.

The dividend increased by 14% in November 2021 to $0.96 annually. The current yield is 5.67%.


Corby’s strengths include leading brands supported by strong marketing and advertising. Its controlling shareholder is Paris-based Pernod Ricard SA, the second largest global wine and spirits company. Pernod Ricard purchased 51.6% of Corby in 2005 and the two companies have enjoyed a mutually beneficial relationship ever since. Investors should note that this also presents a risk, since Pernod Ricard can exert a big influence over the terms of the relationship.  

Corby has some of Canada’s leading spirits brands. Its flagship is J.P. Wiser’s Canadian whiskey. Other brands include Lamb’s rum, Polar Ice vodka, and McGuinness liqueurs. Together they provide 80% of revenue.

Another 20% of revenues come from Pernod Ricard’s impressive list of brands which Corby represents here. They include: Absolut vodka, Chivas Regal, Glenlivet and Ballantine’s Scotch whiskeys, Jameson Irish whiskey, Beefeater gin,  Kahlúa liqueur, Mumm Champagne, and Jacob’s Creek and Viejo wines.

 In its 2022 yearend reported in August, Corby’s annual revenue rose 2 per cent to $169 million with adjusted net income of $45.2 million, down 7% from a year earlier. The profit squeeze came from supply chain issues that affected raw materials, glass for bottles and delayed shipping time for products sent from Europe. Corby sees strong post-pandemic demand driven by a recovery in bar sales, restaurants and other special event venues.  

Between 2019 and 2022, revenues grew 12.7% from $149.9 million to $169 million. Net income declined 9% from $25.7 million to $23.4 million, largely because of pandemic-related constraints including the closure of bars and restaurants. These venues account for 9% of sales.

The lost sales were partly offset through higher volumes sold through provincial liquor boards.  

Corby does not have any long-term debt, so rising interest rates “would not have a material impact on Corby’s financial position over the long term,” it says in its financial statements.  It is exposed inflation through the cost of raw materials including grains, sugar and natural gas to distill its products and is mitigating these risks through longer-term contracts. It is also able to pass increased costs on to consumers.

Corby’s strategy is growth through investment to support its brands, plus exports through its Pernod Ricard partnership. Management discussion of its yearend notes that it has a unique position in Canada, as well as a partnership that enables Corby to leverage both local and global expertise.  

Looking ahead, its sees supply chain issues persisting with raw materials delivery affected by shipping container availability and port disruptions. These have increased lead times on imported products and affected the availability of stock. The company says while things are improving supply chains “may remain unpredictable and continue to be a potential risk, both for the supply of finished goods and raw materials.”

Corby’s pays a quarterly dividend at either 90 per cent of trailing 12-month net income or 60 cents a share annually, whichever is larger. It has paid a dividend in each year since Pernod Ricard became a majority shareholder and occasionally a special dividend. The A and B shares receive the same dividend, though the B shares are non-voting.

Corby is benefitting from the growing consumer fondness for hard spirits, including flavoured gins, bourbons and scotches. It is also able to more easily pass along inflationary costs because the purchases are made less often than with beer and wine and so less noticeable.

The shares are slow, steady performers, the dividend reliable and substantial which adds up to stability in an unstable world.

This article appeared in the Internet Wealth Builder on Oct. 17, 2022.  For information on how to reprint this article please view this page.

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Adam Mayers writes about investing and personal finance. He is a contributor to the Globe & Mail’s Globe Advisor and a contributing editor to Gordon Pape's Internet Wealth Builder newsletter. Adam was Business Editor and investment columnist at The Toronto Star and is the author of six books.

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