Sponsored by
A stock so nice Peter Lynch wrote about it twice.
Crown Holdings ($CCK) is one of the rare companies Lynch highlighted in two separate books. Back when it was still called Crown, Cork & Seal, it earned favorable mention in both One Up on Wall Street and Beating the Street.
In One Up on Wall Street, Lynch wrote:
We’d all be much richer today if we’d put all our money into Crown, Cork, And Seal at 50 cents a share (split adjusted)! But now that you know this, open your wallet and check your latest bank statement. You’ll notice the money’s still there. In fact, you aren’t a cent poorer than you were a second ago, when you found out about the great fortune you missed in Crown, Cork, and Seal.
Beating the Street took things a bit further, with Lynch naming the company as one of his “Blossoms in the Desert,” great businesses operating in terrible industries.
For the unfamiliar, Crown Holdings makes metal cans. Lots and lots of them. The company produces more than 80 billion beverage cans annually and is estimated to manufacture roughly one out of every five beverage cans used worldwide and one out of every three food cans used in North America and Europe.
I first looked at Crown several years ago and passed. That was a mistake.
In today’s special report I’ll explain why Crown Holdings may still live up to its “Blossoms in the Desert” status and why the company could be a strong pick for dividend investors who prioritize growth over starting yield.
The first time I looked at Crown Holdings was 2018. At the time, the company didn’t pay a dividend. Crown later initiated a dividend in 2021, and I revisited the firm in 2023 but didn’t buy for two reasons: the stock’s numbers weren’t all the impressive and the I was concerned that rising metal prices could negatively affect the company.
Since then, Crown has appreciated in share price and raised its dividend three times, while still remaining cheap.
The company currently trades at a price to earnings ratio of 13.91 while paying a 1.24% starting yield and achieving an inflation-beating 5-year compound annual dividend growth rate of 10.66% while also maintaining a safe and low payout ratio of just 13.33%.
This week the company even made a major announcement when it declared a 34.6% dividend increase.
In terms of total returns, Crown lags the general market. The company delivered a 10-year average annual total return 9.48%, significantly underperforming the S&P 500. That’s bad, but there is a silver lining. Crown Holdings has been in business since 1892 and the firm operates in a boring but timeless industry. AI will not replace aluminum beer cans, though it may help streamline and improve the manufacturing process.
As for fears about rising metal prices eating away at Crown’s profit margins, the company operates a “circular economy business model” where the majority of the firm’s aluminum comes from recycled cans.
There are other publicly traded packaging companies, but many of them (like Smurfit Westrock) have significantly higher payout ratios than Crown, or (in the case of Packaging Corporation of America) pay a stagnant dividend that hasn’t budged in years.
The low starting yield and sluggish 10-year performance may turn some investors away from Crown Holdings.
However, the company’s dividend is well-covered. Additionally, Crown’s 5-year compound annual dividend growth rate crushes inflation. And, the recent 34.6% dividend hike is a clear sign that management is serious about rewarding shareholders.
Crown isn’t a market-beater, but it is a well-run company in a defensive niche that’s consistently raising its dividend at a rate that outpaces inflation.
Meet the CEO Behind the ‘Starbucks of Flowers’
Kim Tobman knows how to build giants. Having previously led businesses like Savage X Fenty and President of SKIMS, she turns digital shops into household names.
As CEO of The Bouqs Co., she’s transforming the $100B flower industry.
The company is already one of the biggest floral ecommerce brands. Their model can get flowers farm-to-door 3x more efficiently, slashing waste to below 2% and fueling 270 million stems sold.
In just the past few years, Kim has launched 5 retail stores with The Bouqs Co., all profitable in under a year. Now, they’re ready to open 70+ more. These shops can double as fast delivery centers for high-margin weddings and parties.
Bouqs’ brick-and-mortar stores are already thriving. In towns with stores, the brand has seen 100% year-over-year growth.
With $90M+ in recent revenue, this company has become a nationwide flower powerhouse. Become an early shareholder in The Bouqs Co.
This is a paid advertisement for The Bouq’s Regulation CF offering. Please read the offering circular at https://invest.bouqs.com/
Disclaimer: This article is for entertainment purposes only. It is not financial advice, always do your own research.
