With an emerging industry it is not uncommon to see many companies not offering dividends for their investors, the same could be said for the cannabis industry, as a large portion of cannabis cultivators and retailers are not showing enough profit yet to actively offer dividends.. However there is always an exception to a rule, and in the case of the cannabis sector we have two stocks that are paying out dividends to their investors with an exceptionally high yield, and that is Altria Group, and Molson Coors Brewing. Now many people that aren’t up to date with the news would say these are not cannabis companies, however thanks to some huge deals and partnerships the companies have made they are in the cannabis industry now.
Firstly we have Altria, a well-known name globally, famous for their tobacco products including Marlboro cigarettes and their Skoal smokeless tobacco. The company receives extremely high revenue from these products and other similar products that the company produce enables Altria to pay out a dividend to their investors yielding 6.25%. Now Altria made their move into the cannabis industry in December of 2018 with the announcement that they would be investing $1.8 Billion dollars into Canadian cannabis cultivator Cronos Group. The deal between the two companies gave Altria a 45% stake in Cronos, with the option to execute further warrants and gain majority control over the company. Along with the financial side of things, Altria also gained the rights to choose four of the seven Cronos board of directors, which with Altria’s global dominance could be exceptional for the company.

Altria, alongside the majority of other tobacco producers are seeing a rather steep decline in sales, with tobacco revenue falling 6% year over year in the first quarter of 2019. With the huge investment into Cronos Group, Altria now has an alternative revenue line with a whole new expansion plan into products that are not tobacco, and the company have said in recent months, they are more than eager to move into other sectors. As it stands Altria’s exceptional Dividend payments look to be relatively safe, with the company pumping almost two thirds of its free cash flow to keep feeding the dividend program, which leaves plenty of room for the company to keep their dividends flowing to investors.

Next we have Molson Coors, arguably one of the greatest beer makers in the world, producing household names like Miller Lite and Coors which are leading the company’s revenue generation. Currently the company is offering dividends in the region of 2.98% a far cry from Altria however still exceptional for a cannabis company. The company have recently teamed up with HEXO (Hydropothecary) to create a joint venture into the creation and distribution of alcohol free cannabis infused beverages for the Canadian market, a market which is set to open for business exactly 1 year after the legalization of recreational cannabis on the 17th of October 2019.
Mark Hunter CEO of Molson Coors said in their recent first quarter conference call that he expects cannabis to be a big part of the revenue stream beginning in 2020. However it’s too early to be able to tell how cannabis will affect the company’s revenue just yet. Regardless of how the companies cannabis infused beverages turn out, the company have always kept a steady dividend and we can’t see that changing any time soon, the current dividend payout ratio is less than 36% which leaves plenty of financial flexibility for the dividend payments down the line


Nathan Brown – Walter International