1 Magnificent S&P 500 Dividend Stock Down 66% to Buy and Hold Forever

Core Viewpoint - The alcohol industry, particularly Brown-Forman, is facing significant challenges, with the company's stock down 66% from its peak, but there are reasons for optimism regarding future recovery [1][2]. Industry Overview - The alcohol industry is experiencing its most challenging period in recent history, with a notable decline in consumption, particularly among younger consumers [3][5]. - Americans are drinking at their lowest rate in 90 years, impacting overall industry performance [3]. - The spirits industry, especially whiskey and bourbon, saw a production increase post-COVID-19, leading to a supply glut as market demand has moderated [6]. Company Performance - Brown-Forman's revenue has declined over the past couple of years, with guidance indicating a low-single-digit sales decline for fiscal year 2026 [3]. - The company has a market capitalization of $13 billion, with shares currently trading at $27.35, reflecting a significant drop from a 52-week high of $46.22 [7]. Growth Potential - Despite current challenges, Brown-Forman has a history of innovation and has successfully launched new products, including ready-to-drink beverages, which saw a 9% sales growth in the most recent quarter [8]. - The company has a presence in approximately 170 countries, with strong whiskey consumption in international markets like Brazil, India, and parts of Asia, indicating potential for growth if brands are effectively promoted [9]. Financial Metrics - Historically, Brown-Forman has maintained a price-to-earnings (P/E) ratio averaging 25 since the late 1990s, but currently trades at just 15 times earnings, suggesting a potential buying opportunity [12]. - The company has paid and raised its cash dividend for 41 consecutive years, with the current dividend yield at 3.3%, significantly above historical norms [13]. Future Outlook - While growth expectations should be tempered, there is optimism that as supply and demand balance, Brown-Forman can return to a slow, steady growth trajectory [10]. - The company's core business fundamentals remain intact, making it a potentially attractive investment despite current adversities [15].