Dueling Fools: Wrigley Bull

From the perspective of a long-term shareholder, chewing-gum giant Wrigley (NYSE:WWY) has been a superb company to own. Consider its financial performance over the past decade:

Earnings and dividends have risen consistently over the past decade. As an owner, you merely had to sit back and watch an ever-increasing pile of cash roll into your account. In fact, from 1995 through 2006, your income would have grown at a compound annual rate a shade above 9%. Had you reinvested those payments, your account and income would have grown even faster.

Furthermore, there's Wrigley's absolute dominance in the chewing-gum aisle. Doublemint, Spearmint, Juicy Fruit, Eclipse, Orbit, Extra, Freedent, Hubba Bubba, and Bubble Tape are all Wrigley brands. Aside from Cadbury Schweppes (NYSE:CSG) and its Dentyne and Trident, Wrigley essentially owns the market segment. Add dominant products to shareholder-friendly management, and the picture simply gets better.

Smart growth strategies
Of course, as I'm sure my bearish dueling partner Seth Jayson will point out, chewing gum is a fairly mature market. Even Singapore, which had banned it entirely, has lightened up a bit. With even that repressive market cracked open a little, Wrigley's reach is literally worldwide. When a company's primary product has covered the globe, it must branch out its operations to attain further growth.

In Wrigley's case, it first tried to purchase chocolate giant Hershey (NYSE:HSY), but it was blocked by Hershey's controlling trust. Instead, by acquiring Altoids and Life Savers from Kraft (NYSE:KFT), it launched itself into a line of business very closely related to its core. That seems to have been an excellent move, giving the company much-needed growth without straying too far from its roots. After all, candy and gum go together like peanut butter and jelly. We all know how tasty JM Smucker (NYSE:SJM) stock has been since Jif peanut butter joined its jelly-centric lineup in mid-2002.

In fact, in Wrigley's case, the acquisition is already literally paying dividends. The company's dividend growth rate has accelerated since Altoids and Life Savers arrived, indicating just how well the company can leverage its newfound scale.

The total package
Wrigley clearly has a lot going for it. When you uncover a company with:

• Owner-friendly dividend policies,
• Clear market leadership, and
• Intelligent and profitable growth strategies

like Wrigley, you quite often find an excellent long-term investment opportunity. If you can find that company on sale, it's even better. Down around 21% from the highs it set last October, Wrigley is starting to look interesting. Factor in its better-than-2% current yield with its decade-long 9% annual dividend growth, and your potential total return picture looks that much brighter.

No wonder Wrigley was chosen as a Motley Fool Income Investor selection. From a long-haul, total-return standpoint, Wrigley looks poised to keep pace with the best of them. It's rare that a superb company like Wrigley can be snapped up as a bargain-basement value, however, and I can't quite call it cheap here. That's OK, though. Legendary investor Charlie Munger has often extolled the virtues of buying great companies at good prices. There's nothing wrong with paying a fair price for a stellar business and watching your investment grow over time. When you can get paid for your patience, it's even better.

With Wrigley, you can own a company that's dominant in its industry, treats its owners well, and has shown itself capable of expanding intelligently. What more could you ask for in a long-term investment?

Duel on!

• Read the bear argument
• Read the bullish rebuttal
• Read the bearish rebuttal
• Sound off on Wrigley in Motley Fool CAPS
• Vote for the winner

Wrigley and Kraft are Motley Fool Income Investor picks. Learn how to let great companies pay you to invest -- try Income Investor free for 30 days.

At the time of publication, Fool contributor Chuck Saletta owned shares of JM Smucker. The Fool has a disclosure policy.