Cannabis and dividends go together like… Actually, cannabis and dividends usually don’t go together at all. There’s this tiny little problem that most cannabis companies aren’t profitable yet that keeps any discussion of dividends totally off the table.
However, there are a handful of cannabis stocks that do pay nice dividends. The three with the highest dividend yields are…
Altria Group (NYSE:MO), Molson Coors Brewing (NYSE:TAP), and Scotts Miracle-Gro (NYSE:SMG). You might not view these three as cannabis stocks, but thanks to key deals each of these companies has made, that’s what they are.
Altria is best known for its tobacco products such as Marlboro cigarettes and Skoal smokeless tobacco. The tremendous cash flow generated by these and other products enables Altria to pay out a dividend that currently yields 6.52%.
In December 2018, Altria announced that it was investing $1.8 billion in Canadian cannabis producer Cronos Group (NASDAQ:CRON). The deal gave Altria a 45% stake in Cronos with warrants to gain a majority interest in the company. Altria also won the right to nominate four of the seven members of Cronos’ board of directors.
Sales are falling for Altria’s core tobacco business, with revenue plunging 6% year over year in the first quarter. The big investment in Cronos provides Altria with an opportunity to expand beyond tobacco, something that the company is eager to do.
In the meantime, Altria’s mouth-watering dividend appears to be relatively safe. The company uses around two-thirds of its free cash flow to fund the dividend program, leaving plenty of room to keep the dividends flowing.
2. Molson Coors
Molson Coors ranks as one of the top beer makers in the world with its Miller Lite and Coors brands leading the way. The company’s dividend yield currently stands at 2.98%.
Last year, Molson Coors teamed up with HEXO (NYSEMKT:HEXO) (TSX:HEXO), then known as The Hydropothecary, to form a joint venture to develop cannabis-infused beverages for the Canadian market. This market should open for business in October 2019. HEXO CEO Sebastien St-Louis also recently hinted that the two companies will expand their relationship beyond Canada in the near future.
Molson Coors CEO Mark Hunter stated in his company’s Q1 conference call that he expects…
Continue reading at THE MOTLEY FOOL