Beam Ups Dividend

Premium spirits manufacturer and seller, Beam Inc. (BEAM - Snapshot Report), enhanced its annualized dividend rate by 9.8%, marking an increase of 8 cents to 90 cents per share. Earlier, the company’s annualized dividend was 82 cents per share. The dividend yield based on the new payout and the last closing market price is 1.5%.

As a result of this revision, the company announced an increased first quarter dividend of 22.5 cents per share versus 20.5 cents paid earlier. The raised dividend will be paid on Mar 1, 2013 to shareholders of record as of Feb 6.

The increased dividend reflects substantial long-term growth opportunities for the company, with stringent focus on boosting shareholder value by regular dividend payout. The company targets an earnings payout ratio of 35% – 40% for the longer term. Further, the company’s dividend increase mirrors management’s confidence in the company’s ability to deliver sustainable, profitable long-term growth.

Last week, Beam agreed to sell some of its economy brands and related inventory to Luxco in order to simplify its portfolio as well as enhance its focus on strengthening its most profitable segments – Power Brands and Rising Stars.

The brands to be sold under the deal are Wolfschmidt vodka, Calvert (Lord Calvert Canadian, Calvert Extra, and gin), Bellows (blended whiskey, Bourbon, gin, rum, Scotch and vodka), Dark Eyes vodka, Canada House Canadian, and Tempo Triple Sec, which are a part of Beam’s Value Creators segment. These brands contributed about $30 million to the company’s 2012 revenues, with total volumes sold reaching nearly 1.8 million cases.

Based in Deerfield, Illinois, Beam produces and sells branded distilled spirits products worldwide. Beam segregates its brands into four segments including Power Brands, Rising Stars, Local Jewels and Value Creators. The company sells its spirits products primarily through direct sales forces to distributors, as well as through joint ventures, third-party distributors, and global or regional duty free customers.

Beam currently has a Zacks Rank #3 (Hold). Not all beverage companies are performing as disappointingly as Beam. Other wineries and distillers that have a favorable Zacks Rank and are performing well include Boston Beer Co. Inc. (SAM - Snapshot Report), Compania Cervecerias Unidas S.A. (CCU - Snapshot Report), both of which carry a Zacks Rank #1 (Strong Buy) and Brown-Forman Corporation (BF.B - Analyst Report), which carries a Zacks Rank #2 (Buy).