Revenues continue to rebound as restaurants and hotels re-open. Andrew Peller’s 5.9% dividend yield also looks sustainable.
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ANDREW PELLER LTD. (Toronto symbols ADW.A (non-voting); www.andrewpeller.com) is Canada’s second-largest wine producer after Arterra Wines.
Peller’s wineries are in Ontario (Niagara), British Columbia (Okanagan and Similkameen Valleys) and Nova Scotia. It also produces other premium-priced beverages including whisky, beer and cider.
In its fiscal 2024 first quarter, ended June 30, 2023, Peller’s sales rose 2.8%, to $100.5 million from $97.7 million a year earlier. The higher sales are mainly due to stronger demand from restaurants and hotels as they rebound from the COVID-19 lockdowns. The company also raised its selling prices to offset rising input costs.
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The company recently amended its credit facility. As a result, it incurred a $1.0 million charge on the early retirement of debt. It also paid $1.2 million in re-financing fees.
As a result of those charges, Peller lost $931,000, or $0.02 a share, in the latest quarter. A year earlier, it earned $2.86 million, or $0.06 a share.
Peller expects its sales and earnings will improve in fiscal 2024 now that its supply chain shortages are improving.
The company also aims to unlock the value of its excess real estate. It recently received municipal approval to re-develop its former winery in Port Moody. B.C. as a mixed-use residential, office and commercial complex. The company has not yet said how much this project will cost, but plans to find partners to help construct and finance the development.
Peller last raised your quarterly dividend by 10% with the July 2021 payment. The new annual rate of $0.246 per class A share yields a high 5.9%.
The company has paid dividends since 1979. It has also increased the annual rate by an average 4.2% each year for the past five years. Andrew Peller has an Above Average TSI Dividend Sustainability Rating.
Recommendation in The Successful Investor: Andrew Peller Ltd. is a buy.