"Concha y Toro". Under this beautiful name, both exotic and sensual, hides a Chilean company, producer and exporter of wines. The estate was founded in 1883 by Don Melchor de Concha y Toro and is the largest vineyard in Chile. One of its most famous wines is the Devil's Chest. The wines of Shell and Bull have received numerous national and international awards. In 2003, the magazine Wine Spectator gave the wine a score of 96 out of 100 Don Melchor. Viña Concha y Toro today occupies a prominent position among the most important wine companies in the world.
A wide range of wines has also been developed, allowing the company to participate in all price segments and thus respond to different consumer trends. A joint venture with the prestigious French winery Baron de Rothschild gave birth to Viña Almaviva in 1997. More recently, the company acquired Fetzer Vineyards in the United States. Fetzer is one of the top ten brands in terms of volume on the American market. With a total of 9,500 hectares, Concha y Toro is the third largest winery in the world in terms of hectares planted. The company's total capacity in Chile has thus reached 357 million liters and 43,000 barrels.
VCO is part of my strategy Smoking & Drinking Dividends which seeks solid dividends that are not very sensitive to economic fluctuations. The average yield is relatively modest at 2.3% while the dividend has an average increase of 8.27% per year. The company is very cautious with regard to the use of its profit, since only 39% of it is used for the payment of distributions to shareholders.
VCO displays fairly low volatility, with only 12% relative standard deviation. The beta of 0.71 also confirms that Concha y Toro is not very sensitive to market fluctuations. The graph below shows that the stock has shown steady growth over the last twenty years, ignoring the Internet bubble, its explosion and the subprime crisis.
Listed on the NYSE since 1994, the company represents 30 billion of the Chilean domestic market and 32 billion of Chilean wine exports. 70 billion of its sales are made abroad, in nearly 135 countries (mainly to the United States, Central America, Mexico, the Caribbean, South America, Canada and Asia). Its origin and export markets explain why the stock is not very sensitive to dollar fluctuations, which is confirmed by a $risk of -0.03.
In the end, VCO receives 3 stars, which is synonymous with a good risk/return ratio. A drop in price and/or an improvement in fundamentals could be an opportunity to take a position on this interesting stock. And in the meantime, you can always enjoy one of their excellent wines.
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Thanks for this value... according to Bigcharts, the current yield is 1.29%, which is much lower than what you indicate. However, the price is at the level of the 2008-2012 average. Could this be an error? Should we wait for a drop of 40% in the stock to enter a yield higher than 2%? http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=VCO&insttype=Stock&freq=2&show=&time=20
Hello Yves
with stocks that pay very variable quarterly dividends, the yields indicated differ considerably depending on the sites and the calculation method used. I did some research on the net and we go from 1 to 2.7%! Indeed, either we multiply the last dividend by four and divide it by the price, like Bigcharts apparently, or, which seems much more correct to me, especially in this case, we add the last four dividends and divide them by the price, which gives almost 2.7% as a current yield. Some sites indicate values around 2% I don't know how. Personally, I am a fan of an average yield based on dividends paid which causes fewer errors of interpretation and fewer false signals.
Thanks, it's clear that the Bigcharts calculation (which I was unaware of) is not the right methodology for calculating yield. RARE are the companies that pay 4 identical quarterly dividends. I keep this VCO value on my radar in the 30-35 USD zone.
Sometimes you have to be wary of the numbers you find on the Internet. Not that they are wrong, but the meaning or purpose can change depending on the method used. Choosing an "instant" yield by multiplying by the last dividend is giving a lot of weight to the latter (and conversely little to the past).
Dividends vary based on quarterly earnings, which vary based on sales, which vary based on simple seasonal variations. In this case, you can't project the current dividend over the next four quarters like Big Charts does. And in general, I don't think it's ideal. But it all depends on what you want to do with it...
VCO:
A large part of exports is made to countries whose currencies tend to devalue regularly.
Chile, Central America, Mexico: is this situation not likely to cancel out the gains that we can hope for?
No, because the company is Chilean. On the other hand, the dividend fundamentals have changed since this analysis dating from 2012, the title going from a *** rating to a * rating (low profitability/risk ratio), because the dividend is decreasing.