The Irish 5 – The Five Best Irish Dividend Stocks

Being a small retail Investor in Ireland can be a tricky business. Property is overpriced, I have no trust in the pension system and the taxes around ETF’s are enough to make my mind go all fuzzy.

This has all eventually led me down the dividend growth Investing path. Peter Lynch once famously said to Invest in what you know so this post will outline all of the Irish Dividend-paying companies.

When analyzing companies to invest in, I typically look for companies that show a solid history of growing dividends, They should have a strong a stable balance sheet with no debt and have some growth drivers for the future to give the best chance of continuing to grow the dividend.

In total there are 5 companies on the Irish Stock exchange paying dividends for 5 years on more. This may have been more but companies like Kingspan, Paddy Power and BOI have cut the dividend on the back of Covid-19

So without further ado here is the Irish 5!

Company	Dividend	Yield	Years
Smurfit Kappa	1.09	3.03%	9
Glanbia	0.27	2.69%	20
Kerry Group	0.81	0.68%	20
Total produce	0.05	3.97%	11
Hibernia REIT	0.05	4.00%	5

Smurfit Kappa Group

Smurfit Kappa ( which sounds like an American sorority) is a mid-cap company with a market cap of 8 billion.

They are a packaging company that serves companies like Danone and P & G.

Their segments include 

1. esmart which guides companies through 12 key areas relating to the optimization of the e-retail process
2. Supply Smart which optimizes a companies supply chain
3.  Shelf Smart –  Analyze and improve shelf performance by improving shelf-ready packaging.

Why this company may be interesting – 

Although they cut the dividend in the last financial crash they have been paying a dividend each year since 2011. 9 years is a decent length of time for an Irish Dividend Company.

The current Price is €34.44 and the dividend yield is 3.03%.  The Payout Ratio from earnings is 45% and only 10% from Free Cash flow. FCF has been growing over the last 10 years and they look to have a strong balance sheet.

Their latest Performance review in 2020 showed Revenue growth of 3%, with strong growth in Europe and America and an EBITDA growth of 11%.

Glanbia

Fun Fact – Glanbia was the very first dividend stock that I ever bought.

Glanbia are a mid cap company with a market cap of €2.97 Billion. They were formed in 1997 when Avonmore Foods plc and Waterford Foods plc merged.

Since the merger they have grown from a simple Irish dairy producer to a global nutrition brand. Some of the brands you may be familiar with are

1. Optimum Nutrition
2. Slim Fast
3. American style Cheddar cheese

Why this company may be interesting – 

Glanbia has shown some good dividend growth over the last 10 years. Their current yield of 2.7% is attractive giving that the historical yield hovers around 1.5%

The Payout Ratio from earnings is usually between 25 and 30% and under 40% from Free Cash flow. FCF has been growing over the last 10 years and they look to have a strong balance sheet.

I currently have this company valued at around €17 so looks to be undervalued at them moment.

Disclaimer – I am Long Glanbia

Kerry Group

The Kerry Group is one of Ireland’s large cap companies that has a formidable global presence. With 26k employees worldwide and sales in 150 countries It commands a yearly revenue of above €7 bn.

They operate in 2 segments called taste and nutrition which equates to 90% of trading profit and Consumer foods which equates to 10%

Formed in 1972 as a diary and savoury company they have had incredible growth as can be seen below.

While the dividend yield is too low for my liking at 0.68%, they have offered investors good returns over the past 30 years. They really are Irelands only dividend aristocrat.

Total Produce

Yet another food company. We certainly like our food on the emerald Isle.

Total produce operates out of more than 30 countries and has a vertically integrated supply chain which includes arms, vessels, manufacturing facilities, cold storage warehousing and packhouse.

They operate out of the 4 segments

1. Europe – Non-eurozone
2. Europe – EuroZone
3. International
4. Dole

Europe and North America make up 90% of revenue .The Payout Ratio from earnings is usually under 25% and under 30% from Free Cash flow. FCF has been growing over the last 10 years and they look to have a strong balance sheet

What I also like about this company is that Earnings have been growing at a much faster rate than the dividend. 9% compared to 7% over the last 5 years which indicates that they are in a position to keep increasing the dividend with plenty of room to grow. Total Produce is potentially one of the safest Irish Dividend companies at the moment.

Hibernia REIT

Hibernia REIT focuses on Commercial properties in Dublin while also have a small portion of their portfolio in residential properties.

As of October 2020 they collected 97% of rent due and have also repurchased 11.4m shares for €12 million.

However the share price has dropped considerably over the last number of years due to the EPS dropping around 20% per year of the last couple of years.

For me it is too early to make a judgement on how sustainable a growing dividend is, but at the moment it looks like their maybe better opportunists else where.

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