What are we looking for?
Top-of-the-podium dividends from U.S. and Canadian companies connected to the Pyeongchang 2018 Winter Olympics.
The screen
The Games in South Korea aren't without controversy – from the participation of Russian athletes as "neutrals" to a men's hockey tournament without, ahem, the NHL.
Still, TV coverage of the Games reaches billions of consumers in 200 countries, providing sponsors massive brand exposure.
We think leading consumer brands will gain the most from their sponsorships.
But which are best placed to profit from that brand boost and to bolster their future dividends?
Our search started with an extensive list of U.S. and Canadian dividend payers – each an Olympics sponsor, or partner for Team Canada, with its own well-established brands. We then applied our TSI Dividend Sustainability Rating System. Based on key factors, the rating system awards a dividend payer:
- One point for five years of continuous dividend payments – two points for more than five;
- Two points if it has raised the payment in the past five years;
- One point for management’s commitment to dividends;
- One point for operating in non-cyclical industries;
- One point for limited exposure to foreign currency rates and freedom from political interference;
- Two points for a strong balance sheet, including manageable debt and adequate cash;
- Two points for a long-term record of positive earnings and cash-flow sufficient to cover dividend payments;
- One point if the company is a leader in its industry.
Companies with 10 to 12 points have the most secure dividends or the highest sustainability. Those with seven to nine points have above-average sustainability; average sustainability, four to six points; and below average sustainability, one to three points.
More about TSI Network
TSI Network is the online home of The Successful Investor Inc. – the group of widely followed Canadian investment newsletters by editor and publisher Pat McKeough. They include our award-winning flagship newsletter, The Successful Investor. The TSI Best ETFs for Canadian Investors is the latest newsletter. TSI Network is also affiliated with Successful Investor Wealth Management.
What we found
Our TSI Dividend Sustainability Rating System generated seven stocks. Top global brands Coca-Cola and Procter & Gamble rely heavily on marketing to boost sales. And while Pyeongchang is McDonald's last Olympics as a leading sponsor, the fast-food giant relies on its ubiquitous advertising during the Games for a sales spike. Visa will use its own sponsorship to showcase "wearable" contactless-payment technology. That platform should drive revenue growth. As "premier national partners," BCE (Bell), Royal Bank of Canada and Canadian Tire stand to cement their leading positions by backing Canada's Olympic team.
We advise investors to do additional research on any investments we identify here.
Scott Clayton, MBA, is senior analyst for TSI Network and associate editor of TSI Dividend Advisor.