What could be better than getting your favourite snack from your local Brumby’s Bakery, Michel’s Patisserie or Crust Gourmet Pizza Bar? Surely the only thing would be investing in the company that owns those stores, so that every snack you buy goes towards its profits and contributes to the dividend payout every 6 months.
Luckily for those investors who want to invest in ‘what they can taste’ rather than Peter Lynch’s famous ‘invest in what you know’, there are a number of excellent companies listed on the ASX that own food outlets and pay big dividend yields.
The first is Collins Foods Ltd (ASX: CKF). Collins runs approximately 125 KFC restaurant franchises throughout Queensland and New South Wales, as well as owning and operating 30 Sizzler restaurants around Australia and is the franchisor of around 60 stores in South East Asia. Collins is up nearly 16% over the past 12 months and has a forecast yield of 5.3% fully franked, or 7.5% grossed up.
Retail Food Group Limited (ASX: RFG) has chased growth via a acquisition strategy for the past five years, purchasing a number of fast food chains to now control a stable of brands including Donut King, bb’s cafe, Brumby’s Bakery, Michel’s Patisserie, Esquires Coffee Houses (Australia & New Zealand), Pizza Capers Gourmet Kitchen, Crust Gourmet Pizza Bar and The Coffee Guy. Retail Food Group’s quality has been recognised by investors pushing the share price up 25% over the past 12 months. This has reduced the dividend yield, but it’s still healthy at 4.7% fully franked, or 6.7% grossed up.
Finally, Patties Foods Limited (ASX: PFL) offers a very different approach. Patties specialises in the manufacture and marketing of frozen food products to supermarkets, delis, and sporting venues. Brands sold include Herbert Adams, Patties, Patties Gluten Free, Nanna’s, Creative Gourmet, Four’n Twenty and Chefs Pride, which sell everything from sausage rolls and pasties, to frozen fruit, to beverages and desserts. Patties hasn’t delighted investors in the past 12 months, having fallen nearly 16%, but is now delivering a yield of 5.2% fully franked, or 7.5% grossed up.
It doesn’t get much better than buying a pizza and the profit the company makes from it ending up in your pocket via a payout every 6 months. Patties Foods, Retail Food Group and Collins Foods all do this and pay investors a handsome return for their capital. They have all been solid performers and should continue to perform well, and pay out tasty dividends in the future.
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Motley Fool contributor Andrew Mudie does not own shares in any companies mentioned