Berkshire Hathaway's Dividend Portfolio: Why Constellation Brands Stands Out
In his first shareholder letter as CEO of Berkshire Hathaway, Greg Abel reiterated the company’s stance against paying dividends while retaining earnings to create value. Despite this policy, Berkshire owns 26 dividend-paying stocks in its $299 billion portfolio. Among these holdings is Constellation Brands (STZ), a leading U.S. beer importer and marketer known for brands like Corona and Modelo. Constellation has faced revenue declines due to demographic shifts, tariffs, inflation, and reduced consumption among Hispanic consumers—its largest customer base. However, the company improved profitability by divesting lower-margin wine and spirits businesses in favor of its higher-margin beer segment. In recent quarters, adjusted earnings rose 7% year-over-year despite a 3% revenue drop. Constellation Brands currently offers a dividend yield of 3.64%, with a sustainable payout ratio of just 34%. The stock is trading at an 11 times earnings valuation and has dropped nearly 19% this year, reaching a 52-week low. Analysts remain optimistic, with over two-thirds rating it as a 'buy' and setting a median price target suggesting potential for more than 50% upside.
Tickers: $STZ
Topics: Berkshire Hathaway portfolio Constellation Brands dividends