This beverage company should prove to be a reliable dividend stock

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Much smarter financial commentators than me point out that now is the time to go for the money. But with consumer price inflation at 10% and interest rates at 1.75%, let’s just say I’m a little hesitant to see my hard-earned money devalue at more than 8% a year. Therefore, I actively seek out dividend-paying stocks that can consistently contribute to my bottom line.

To be clear, British The current 2.95% dividend yield of (LSE:BVIC) is hardly going to set the world on fire and is nowhere near beating this current rate of inflation, but I think there’s a lot to like about this company.

Firstly, using last year’s income statement figures, we have earnings per share of 44.3p and dividend payout per share of 24.2p. Dividing one by the other yields a respectable dividend cover value of 1.83. This implies that this level of dividend is perfectly sustainable and well covered by profits.

An interim dividend paid in July 2022 (7.80p) showed a 20% increase over the same period in 2021, again suggesting the company is on the right track. The latest third quarter update reported an 11.2% increase in revenue compared to the same period last year.

In 2020, Britvic signed a 20-year franchise bottling deal with another soft drink giant PepsiCo. This includes the production, distribution, marketing and sale of soft drink brands which include Pepsi, 7 PU and Mountain Dew.

Personally, I would be completely comfortable investing in this company that manufactures and distributes such well-known brands, even in this economic climate. I expect the soft drinks sector to remain a consumer staple as discretionary spending continues to deteriorate. The CEO himself is said to have said that soft drinks fall into the “resilient” category.

I am aware that Britvic has a presence in Europe, which may face even greater economic challenges than here in the UK, but am excited about its growing presence in Brazil. It seems that by owning shares of this company, I also get some exposure to emerging markets.

The company stressed that it can alleviate the worst inflationary pressures facing all manufacturers. How it will cope with rising energy costs in particular is less clear. Reassuringly, he describes his supply chain model as “robust”.

While the stock price has languished somewhat over the past 12 months by around 16%, my focus here remains reliable income and capital preservation rather than capital gains. Therefore, I continue to watch this price action with interest in search of an opportune time to add Britvic to my portfolio.

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