Fortune Brands (NYSE:FO) reported earnings for the third quarter last week. The company had a stellar report, with double-digit growth all around, but it should be noted that the growth was not all organic. You can get all of the numbers via the Fool's handy crib sheet.

Take a look at that Fool by Numbers, and you can see that Fortune seems to be hitting on all cylinders. It looks to be managing its various product lines, including Moen and Master Lock, as well as its sundry sprits and wine items, with skill. But there's got to be some bad news here, right? Well, Mr. Market was hoping for even better. The company was supposed to earn $1.33 instead of the $1.30 it actually delivered, excluding one-time items.

So even though the company fell short of what Wall Street was hoping, I say to heck with Mr. Market! This is the kind of growth that gets people excited and instills confidence in the individual investor. I especially liked the free cash flow performance. I was curious as to how the company fared on this count over the past few years, so I checked out the latest 10-K.

Metric

Year Ended Dec. 31, 2005

Year Ended Dec. 31, 2004

Year Ended Dec. 31, 2003

Net Cash From Operating Activities

$802.7

$791.9

$790.7

Capital Expenditures

$221.9

$241.7

$193.9

Free Cash Flow

$580.8

$550.2

$596.8

Dividends Paid

$201.6

$183.5

$166.9
Numbers in millions.

As can be seen, the growth numbers aren't as robust. In addition, the company has spent more than $5 billion for acquisitions during the past few years. Should I now be down on Fortune Brands? Not necessarily, because for one thing, the free cash flow is enough to cover the dividends and then some.

But it should be noted that quarterly sales growth on a comparable basis -- i.e., excluding the effect of acquisitions and other things such as currency changes -- was estimated to have appreciated a more modest 3%-4%. (Anders Bylund talked about acquisition activity in a previous article.) The acquisitions may have taken up a lot of money, but the company is betting that those purchases will make sense going forward. I believe that it is wise for a consumer business like this to expand its offerings, and in fact, I agree with its diversified business approach.

Another thing to consider is that Fortune Brands has raised its dividend the past several years -- proof that it is dedicated to returning value to shareholders. In 2003, the annual dividend was set at $1.14 per share; today, that payout stands at $1.56 per share.

I don't golf and I don't drink, but I recognize that iconic names like Jim Beam and Titleist can help drive value. I also recognize that these pastimes are never going away (and neither is the need for products to furnish a home). While investors should always be wary of non-organic growth, they should realize that this is part of the strategy for this particular entity -- I believe that Fortune should do well over the long haul and that stockholders will see more dividend increases in the future.

In a competitive marketplace that includes the likes of Diageo (NYSE:DEO), Constellation Brands (NYSE:STZ), Masco (NYSE:MAS), and Brown-Forman (NYSE:BF-B), you've got to be on the lookout for complementary brands and businesses to keep ahead. Fortune's stock is currently yielding 2% -- if the shares pull back and start sporting a higher yield, then it is definitely time to do some serious work on this one.

More Takes on Fortune Brands and its competition:

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Fool contributor Steven Mallas owns none of the companies mentioned. Yesterday, he was ranked 772 out of 11,834 investors in the CAPS system. Don't know what CAPS is? Check it out. The Fool has a disclosure policy.