The company has successfully expanded its dairy operations from their Canadian base to become a true worldwide company. It now has assets in the U.S., Europe, Argentina, and Australia.
Saputo’s management team has identified dozens of potential expansion opportunities around the world. Possible targets include further into the United States, Brazil, or New Zealand. Asia is the long-term prize, with nations like China really poised to increase their milk consumption.
Earnings for 2016 are projected to hit $1.82 per share, which translates into a payout ratio of just 33%. Management is also returning cash to shareholders through a share buyback of up to 750,000 shares.
Even if Saputo doesn’t make any additional acquisitions, dividends could grow faster than earnings for years before the payout came into danger. Adding in the potential for additional acquisitions just sweetens the pie.