How do you define a sweet stock? How about one that has risen steadily for 25 years, is producing more than $500 million in annual trailing free cash flow, and is investing heavily in its future?
Producing those results is a household name: chewing gum king Wrigley
When the company announced 2004 results, it had a familiar ring. Revenue for the year was up 19%; earnings were up 11%. Sweet!
Wrigley believes in sharing its sweet wealth with shareholders. It is raising the quarterly dividend by 19% to $0.28 a share (a 1.6% yield annually). Could high insider ownership -- something the Motley Fool Hidden Gems newsletter looks for -- be a reason? You bet! Insiders own 26.8% of Wrigley, and they want to get paid.
Wrigley is not about milking a cash cow. It is actively looking to grow through acquisition. Although the company made front-page news in its failure to acquire Hershey
Wrigley's stock is arguably priced at a premium: more than four times sales, 21.7 times cash flow, and 32 times trailing earnings. It has been that way for years.
Compared to that of its peers, Wrigley's value looks compelling. Topps
You can find concerns that Wrigley is overpaying for Kraft's assets. But investors buying Wrigley are looking at 25 years of success, great free cash flow, and what looks to be a promising future. That's a sweet combination.
Fool contributor W.D. Crotty does not own stock in any of the companies mentioned. Click here to see the Motley Fool's disclosure policy .