Molson Coors Brewing Company (NYSE:TAP)

TAP is a title of mine portfolio which is part of my strategy Smoking & Drinking Dividends. Molson Coors Brewing Company is a company formed by the merger of two major North American breweries: Molson of Canada and Coors of the United States, on February 9, 2005. As of 2011, it is the fifth largest brewer in the world, with 40 % of the Canadian market and 29 % of the American market. Molson Coors operates in many communities around the world, ensuring that the local flavours of each region are captured through strategic sourcing and then offered to consumers around the world.

Molson Coors has a wealth of experience, inherited from 350 years of history. The beers are manufactured in the United States, the United Kingdom, the Czech Republic and Canada. The portfolio includes more than 100 beer brands, including Coors Light, Molson Canadian, Miller Lite, Carling and Staropramen, as well as craft and specialty beers like Blue Moon, Creemore Springs and Cobra.

Beer is the preferred alcohol in the United States, where the company generates three-quarters of its turnover.In 2008, Molson Coors entered into a joint venture with SABMiller to create MillerCoors. Molson Coors holds a 42% stake in the joint venture. MillerCoors controls 30% of the U.S. market, behind Anheuser-Busch InBev.

15% of Molson Coors CA is made in Canada, where the company currently controls 40% of the market. The company is also the third largest brewer in the United Kingdom with around 19% of market share. The company generates 10% of its turnover there.

Because the company does not have a significant presence in wine and spirits, a faster-growing segment of the industry, Molson Coors must seek growth in emerging markets and through partnerships and acquisitions. In 2010 alone, the company expanded into Russia, Vietnam and entered into a partnership with Chinese brewer Si'hai. In late June 2010, Molson Coors announced the Coors Light launches in Russia, the world's fourth largest beer market (behind China, the USA and Brazil). We just want to taste it...

THE average yield is correct, with 2.40%, while the average annual dividend growth is particularly supported with 14.75%The distribution ratio, with 42.17%, leaves a good margin for Molson Coors to continue to increase its dividend in the future, even in the event of a difficult passage.

The volatility of the CHF stock is low, with only 12.26%. Although the stock suffered somewhat in 2008, it recovered very quickly. With a beta of 0.77, TAP is not too sensitive to market fluctuations.

Molson Coors is highly exposed to commodity prices such as barley and grains. However, dual Canadian-U.S. citizenship, multiple manufacturing sites and TAP's gradual opening to emerging markets allow the stock to somewhat free itself from the greenback. THE $risk is thus null, meaning that when the dollar fluctuates, the impact on the CHF value of TAP tends to be insignificant.

In conclusion, TAP is a title that has multiple qualities for a dividend payer: a yield that is certainly not huge but whose dividend is growing strongly, a prudent distribution ratio, low volatility and a deleveraging against the greenback. For these reasons, TAP receives a rating of 4 stars, which is a very good profitability/risk ratio.

 Sources: Wikipedia, Wikinvest, Bigcharts, Swissquote, MolsonCoors, dividends.ch