Beer stocks have been getting a little more attention lately, thanks to the announcement that PepsiCo (PEP) and Boston Beer (SAM) are teaming up to create an alcoholic version of Mountain Dew. Not to mention a number of beer companies are getting in on the hard seltzer game.
For those who think these new alcoholic beverages are a genius move, it might be a chance to put a little money into a sudsy stock. You can start investing even though you're no financial whiz nor have a fortune to put in, just look for low-priced shares or get involved with fractional investing.
If you’re interested in adding a little liquid courage to your own portfolio, here are a few beer stocks you might consider.
Founded in the 1850s, Anheuser-Busch is the brewer of well-known brands Budweiser and Michelob. Additionally, the company brews Faust and owns Stella Artois and Shock Top. Anheuser-Busch also owns 10 Barrel Brewing, which has expanded beyond craft beer into canned mixed drinks and some hard seltzer brands.
Part of the reason there are so many brands associated with the company is that global giant InBev acquired it in 2008 to create the world’s largest beer company, now known as Anheuser-Busch InBev SA/NV or AB InBev.
Performance for BUD has been fairly stable over time. The pre-pandemic dividend yield was often over 3.0%. Though the yield did drop significantly during 2020, this stock could offer the potential for relatively stable returns over the long run.
Constellation Brands (STZ)
Beginning in 1945 as a wine producer, Constellation Brands, Inc. has grown to include a variety of beer and spirits. Some of the well-known brands associated with Constellation include Modelo and Corona.
With hard seltzer gaining ground in 2020 and industry analyst T4 expecting the hard seltzer market to grow by 35% in 2021, it’s no surprise that Corona has introduced a seltzer version of its product.
Even though STZ is down on the year, it’s seen some growth over time, especially since 2011. A dividend yield of 1.42% makes this a reasonable stock to hold for long-term stable returns.
Boston Beer Company (SAM)
Even though its famous brand, Samuel Adams, is named after one of the founding fathers of the United States, the Boston Beer Company was founded in 1984.
The company’s lore involves the founder finding his great-great grandfather’s recipe in an attic and then brewing it. Today, Boston Beer Co. also includes such brands as Dogfish Head, as well as Twisted Tea and Truly hard seltzer.
Unlike some of the other beer stocks on this list, SAM doesn’t offer a dividend. Additionally, the company saw a rapid increase in its stock price in 2020, although it’s lost some ground in 2021.
There is potential for this to be a good bet for growth in the future. The P/E ratio is at 29.75, indicating that investors see some potential. It could be a fair short-term play, especially if you believe SAM will benefit from the Mountain Dew deal.
Molson Coors (TAP)
The Molson Coors Beverage Company claims to trace its history to 1774. The company is a fusion of Canadian brewery Molson, with the Coors company, famously started in Golden, Colorado. And, of course, the company also includes Miller, which was started in Milwaukee, Wisconsin.
Molson Coors Beverage Co. brands include the beers the involved breweries are known for, as well as Blue Moon and Hop Valley. Arnold Palmer Spiked is also a brand, as well as the non-alcoholic Henry Weinhard’s.
TAP’s highest price point was reached in 2016, although it’s still up over time. The most recent five years haven’t been particularly kind to TAP, but the worldwide brands involved could provide potential growth in the future. The dividend yield is 2.88%.
United Breweries Limited (UBL)
United Breweries Limited was founded in 1915 when five breweries in southern India joined forces. Its flagship brand, Kingfisher, is the leading Indian beer in international markets.
Other known brands owned by United Breweries — which has expanded significantly beyond Indian beer brands — include Amstel and Heineken.
UBL has grown in price consistently over time. Additionally, UBL represents the most expensive stock out of the beer stocks on this list. The dividend yield is 0.035%, and this stock might be too high-priced for some to feel like it’s a good deal.
Ambev SA (ABEV)
Ambev is the result of the merging of two of the oldest breweries in Brazil. The company’s roots go back to 1885, although Ambev in its current form dates only to 1998. The company has distribution rights for Pepsi products in Brazil, in addition to its international beer brands, which include Skol and Brahma.
ABEV is the least expensive stock on this list, with a price below $5 per share as of August 26, 2021. The stock hit its highest price in 2013, and performance has been somewhat choppy since then. Like SAM, ABEV doesn’t pay a dividend.
The pros and cons of investing in beer stocks
- Prices have been relatively stable over time. Beer stocks have had relatively stable prices in the long run, with all of them generally higher over a period of decades.
- The beer industry is expected to grow. The analyst firm Allied Market Research suggests that the global beer market will likely grow over time, reaching over $685 billion by 2025.
- Off-premise beer sales can grow during difficult times. Market data from the National Beer Wholesalers Association found that off-premises beer sales increased during the COVID-19 pandemic, indicating that during tough times companies have some staying power.
- On-premise beer sales are more volatile. During pandemic-related shutdowns, on-premise beer sales can fall enough to offset off-premise beer sales.
- Dividends are relatively low. Even though some beer stocks pay dividends, the yields aren’t as high as you might see with other types of stocks.
What are the best beer stocks?
There is no one answer when it comes to determining the best beer stocks. As you learn how to invest money, it’s important to consider your own portfolio goals and strategy to determine what makes the most sense for you. Starting with our list above could be a good place for learning more, though.
Are any craft breweries publicly traded?
The Boston Beer Company (SAM) is typically still considered a craft brewery and is publicly traded on the NYSE. Some other craft beer producers have been acquired by publicly-traded companies. For example, Anheuser-Busch InBev owns about 100 craft breweries. In the past, some craft breweries were represented by Craft Brew Alliance, which traded under the ticker symbol BREW. However, the final acquisition of that company by BUD was announced in 2020.
What beer company makes the most money?
The two largest alcohol companies by market cap are Chinese companies. However, BUD has a market cap of more than $121 billion and is considered one of the biggest beer companies in the world.
In some cases, you might not be interested in trying to pick individual beer stocks. One way to get around this is to invest in an exchange-traded fund, or ETF, that focuses on a sector known as “consumer defensive.” Beer stocks are included in this sector, so getting an ETF like the Vanguard Consumer Staples ETF (VDC) could provide you with access to beer stocks.
If you’re interested in investing in alcohol-related products, but you’re not sure beer stocks are the way to go, you could use Vinovest to invest in wine. With Vinovest, you set up an account, and your money is invested in a portfolio of wine. For more details, check out our Vinovest review.
Finally, you can also consider other “vice” stocks that have the potential to grow in the future. Some investors look for cannabis-related stocks and ETFs, like MJ, which focuses on the cannabis industry. It can be difficult to figure out how to invest in marijuana until federal restrictions on it are lifted, but there are still some interesting plays.
While these all might have been considered strange things to invest in in years past, those days are long gone now. But no matter what investment you choose, it’s important to carefully consider your goals and values. Do your research because there’s always a chance you can lose money in the stock market, no matter what you invest in.
Disclosure: The author has positions in SAM and MJ.
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