The stock price is close to 676p, a food ingredient expert Taylor (London Stock Exchange: Tate) It has a forward-looking dividend yield of approximately 4.6%. Calculation factors in City analysts’ dividend estimates for the trading year ending in March 2023.
Stable transaction and financial records
I like dividend payers because they have stable financial and transaction records for many years. This business has the advantage of operating in the food sector.I think this industry is very attractive because it Defensive tendencyNo matter what the broader economy is doing, the demand for food and food-related products is usually the same.
However, Tate & Lyle may be more than just a sleeping cash cow business.As early as July, the company Announced its intent Reposition yourself as “Growth-centric” Global food and beverage operator. And took a bold move, proposing to split its business into two companies.
One of them will be Tate & Lyle, which the directors describe as a food and beverage solutions business focused on the fast-growing professional market. The other will be NewCo, which they describe as a leader in plant-based products in the food and industrial markets.
NewCo will own Tate & Lyle’s “Agricultural Products” Business. This means that operations are closer to the beginning of the food production chain, such as corn wet mills in the United States and acidifier plants in the United States and Brazil.
Tate & Lyle plans to jointly own NewCo with a company called KPS Capital Partners. Everyone will own 50% of NewCo’s shares, and KPS will be responsible for running the show and owning the board of directors and operational control. Tate & Lyle expects to obtain approximately US$1.3 billion in total cash proceeds from the sale of a controlling stake in NewCo.
Extract more value and potential from the business
But if things go well, Tate & Lyle’s 50% stake will ensure that the company benefits from NewCo’s success through future dividend flows. In my opinion, this potential transaction is like an elegant solution to extract value from the existing Tate & Lyle organization. These two separate businesses will be able to focus on their respective strategies. And I think that in business, a narrower focus is almost always a good thing—it’s better than trying to handle too many things and aiming to provide everything for everyone.
We learned about the potential of the proposed new and streamlined Tate & Lyle in our press release on October 19. The company reports that it has opened a new technology application center in Dubai.Directors estimate $2 million “most advanced” The center will house the company’s food scientists. They will focus on developing solutions for food and beverage customers in the Middle East, Turkey and Africa. In these areas and other areas, “The growing demand” Used for foods with less sugar, fat and calories, and more fiber.
I think the company’s investment in the region underscores its commitment to seek growth markets where it considers emerging markets. We can see some steady operational progress, driving shareholder dividends and stock prices higher in the next few years.
Of course, nothing is certain, and the company may face setbacks, causing its share price to fall. In fact, city analysts have yet to predict any meaningful growth in earnings in the next few years. Nevertheless, while waiting for growth, I still want to hold some stocks to receive dividends.
Kevin Goldbold There is no position in any of the above-mentioned shares. The Motley Fool UK has no position in any of the aforementioned stocks. The views expressed by the companies mentioned in this article are those of the author and may therefore differ from the official recommendations we made in subscription services such as Share Advisor, Hidden Winners and Pro. At The Motley Fool, we believe that taking into account a variety of different insights, We are better investors.