At Stansberry Research, we like to refer to the best companies with growing dividends as "World Dominating Dividend Growers" (WDDGs). These companies can make for some of the best long-term investing opportunities out there.
You see, these businesses are usually at the top of their industries and have great brand recognition. And they're insanely good at beating out the competition. This ensures that they'll remain the dominant players in their sectors year after year.
For example, nobody beats Walmart (WMT) at offering everyday low prices on basic items, so it'll likely remain the No. 1 retailer in the world.
Likewise, nobody sells as many sodas and other beverages as Coca-Cola (KO), so it'll be incredibly difficult to remove it from the No. 1 spot.
WDDGs are some of the safest investments you can hold in your portfolio for years.
Sysco (NYSE: SYY) is the World Dominator of the North American food-services-distribution industry. No competitor sells a greater variety of food and food-related products.
As a wholesaler, Sysco sells more than 400,000 different items – including fresh produce, dairy, and canned goods... plus paper, kitchen utensils, and other equipment – to restaurants, hospitals, hotels, schools, and colleges throughout the U.S. and Canada.
No other company can match Sysco's physical presence in North America. It sells products from 194 distribution centers, mostly in the U.S. and Canada but also extending to the Bahamas and Ireland. That's nearly three times more North American locations than its largest competitor.
As with many other WDDG stocks, this business is too big for the competition. Sysco offers a greater variety of products and sells more of them to more customers than any of its competitors.
Sysco has an 18% share of the $600 billion North American food-services market. That's twice the size of its largest competitor.
To call the North American food-distribution market "highly fragmented" is an understatement. In addition to the 13 largest companies in the industry, there are about 16,500 smaller food-services distributors in North America, with product sales ranging from $400 million for the national distributors... down to less than $10 million for the smallest specialty companies.
A highly fragmented market is a great thing for Sysco...
It means the company has a huge opportunity to grow market share. It can either steal customers away from competitors... or it can acquire those competitors.
Sysco has done a brilliant job of growing market share. In 1980, it had about 5% of the market. Since then, Sysco's market share has nearly quadrupled to 18%.
Having such a large share of the market ensures strong, steady growth for Sysco.
In its most recent fiscal year, Sysco reported sales of $60.1 billion, up 2.4% from the year before.
Sysco's sales have grown by an average of 5% per year over the last five years. While this may not be as exciting as a high-growth technology company, it's very reliable.
It also consistently grows its earnings. Sysco's earnings before interest, taxes, depreciation, and amortization ("EBITDA") increased to $3.4 billion over the past year, up from $2.6 billion in 2016.
And Sysco loves to reward shareholders.
In its 2019 fiscal year, the company paid out $775 million in dividends, and it will spend more this year.
For the last 42 years, Sysco has boasted incredible dividend growth – a long-term record of dividend growth that puts it in elite company. There aren't many dividend-growth stocks like this in the world...
Sysco has paid a dividend every year since it went public in 1970. And it has raised its dividend a total of 43 times... every year for the last 40 years. Analysts tracked by Bloomberg expect Sysco to raise its dividend again before the end of the year.
And the dividend continues to increase... Over the past five years, it has grown at an average pace of 6.1%.
Sysco doesn't just use dividends to reward its shareholders. It also buys back stock.
Over the past 12 months, Sysco has bought back more than $750 million worth of its own shares. Since peaking in 2015, Sysco's number of shares outstanding has fallen more than 14%.
Sysco's price action is remarkable. The stock's price has moved up and to the right, remaining in a strong uptrend. As you can see in the chart below, it has more than doubled over the past five years. And it recently hit a new all-time high.
Sysco dominates its market... and should continue to do so for years to come. Its history of rewarding shareholders is one of the best out there. The stock's recent performance highlights the strength of investing in "World Dominating Dividend Growers."
Sometimes investing is simple.