My Own Advisor

Who they are:

Sysco Corporation (SYY:US) is the global leader in selling, marketing and distributing food products to restaurants, healthcare and lodging establishments.  Since Sysco’s initial public offering in 1970, when sales were $115 million, they have grown to almost $40 billion in sales.  Sysco, an acronym for Systems and Services Company, has food delivery at its business core serving over 400,000 clients…and growing.

Beyond being the leading supplier of ”meals-prepared-away-from-home” operations in North America, its family of products also includes equipment and supplies for the foodservice and hospitality industries.  Sysco operates 177 distribution facilities in the U.S. and Canada. 

Why I picked them:

Here’s an overview of Sysco’s metrics and some reasons why I bought this stock.

• Cash flow has been steady.
• Sysco has paid a quarterly cash dividend every quarter since its founding as a public corporation in 1970.
• It has increased its dividend 43 times over this period (since 1970).  It’s a dividend champ.
• Foreign sales have been rising, making this an international and more diversified company.

• Sysco is the largest North American distributor of food; with approximately 15% market share.  They have a modest economic moat and it’s growing.
• Market capitalization of over $17-billion.
• Quarterly dividend payment is $0.27 USD.
• Dividend yield ~ 3.5%.
• Dividend payout ratio is just over 50%; modest and sustainable.
• The company consistently repurchases its outstanding common stock.  Recently, Sysco’s Board of Directors approved a 20-million-share repurchase program. The program is “intended to help the company achieve its goal of keeping the number of diluted shares outstanding relatively constant and is Sysco’s seventeenth share repurchase program since fiscal 1992.”
• 5-year average dividend growth rate is >8%.
• The iShares High Dividend Equity Fund owns a bunch of it as does Vanguard’s High Dividend Yield Fund.  
• % shares held by institutions, over 70%.  Good enough for all those big pension plans, good enough for me.

I bought Sysco for my RRSP but unfortunately it was a small position.  My entry point was just over $27 USD.  I hope the company price drops again this year, so I can get some more shares and activate my synthetic DRIP.   Sysco share price closed over $30 USD today. 

I think this company is poised for great returns long-term.  The demand for food and delivery of it is not going anywhere anytime soon.

What’s your take on Sysco?   I’d love to hear your thoughts!

For further reading, you check out what Dividend Ninja said about Sysco here.