Trading at $41.99 as of June 13, 2001
Dad deserves the best, and since that battery-operated tie hasn't ever seen the outside of his closet, maybe it's time to go in another direction. Treat him like a king this year with shares of the King of Beers, Anheuser- Busch
Anheuser Busch is best known for its namesake beer brands Bud and Bud Light, but the world's largest brewer is more than just another beverage company. It commands 49% of the U.S. beer market, dwarfing Miller's (part of the Philip Morris Companies
The beverage business is as much about mindshare as it is about taste, so Dad can rest easy knowing that the St. Louis-based Bud will spend more than $2 billion in "marketing, distribution, and administrative expenses" this year protecting its brand. To put that in perspective, Coors had net sales of $2.4 billion last year. Whoever told you size doesn't matter didn't work for a consumer brand company.
But where does a company that's captured nearly 50% of the domestic beer market go from here? Well, the "Whassup?" guys and Louie the Lizard do have some clout outside of the U.S., but last year Bud derived less than 5% of its revenues from international beer sales, so there's plenty of room for expansion abroad. Bud also extends its beer market domination south of the border with its 50.2% interest in Mexico's Grupo Modelo, which controls 55% of the Mexican beer market. The smell of Bud beer doesn't stop at the Panama Canal either, thanks to interests in Chile's largest brewer and an 11% stake in a major Argentine brewer.
As Foolish investors we believe that owning shares of a company makes us part owners, not just market spectators, so Dad can brag about being a part owner of Bud's man-sized divisions. If the old guy is into metallurgy, he can brag to his friends about Bud's Metal Container Corporation (MCC) that makes packaging material, like cans and lids, or its Eagle Packaging division that makes liner materials. If that weren't enough, there's Busch Entertainment, which hosted 21 million visitors last year at parks like Discovery Cove, Sea World, and Busch Gardens.
These divisions didn't add a significant amount to the bottom line last year, but they do complement the core beverage business. Last year, the Packaging Group supplied 61% of the company's cans and 80% of its lids, reducing Bud's exposure to production delays and pricing pressures from third parties. Also, part of this group is the world's largest aluminum can recycler, so Pops can feel proud that he's helping clean up the mess he makes.
Is he a sports fan? Bud is the official sponsor of the Ladies Professional Golf Association (LPGA), Major League Baseball (MLB), Major League Soccer (MLS), NASCAR, the National Basketball Association (NBA), the National Hockey League (NHL), the Professional Golf Association (PGA), and the Women's National Basketball Association (WNBA). Therefore, unless your father thinks bowling is the only sport for men, he'll certainly have an opportunity to support his investment by purchasing a cold one at his favorite sporting event. If he's more of the couch potato type, I hear Bud products can also be consumed at home in convenient 12-ounce portable aluminum or glass containers.
Anheuser-Busch's 1.5% annual dividend may also relieve some of the financial burden you caused as a youngster when you treated him more like an ATM than a DAD. A hundred shares would return $66 to Dad's wallet each year, but if you get in now, it gets better. Summertime is when Bud increases its dividend. Like clockwork, Bud has bumped its dividend each summer for the past several years and the current quarterly dividend of 16.5 cents per share will most likely be increased to 17.5 or 18 cents per quarter. Now that's truly a gift that keeps on giving.
Todd Lebor (TMF Tee Time) does not own shares in any of the companies mentioned above but contributed his fair share to Anheuser-Busch's growth in college. View Todd's other holdings in his profile.
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