My Top Dividend Stock To Buy In October
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With all of the sell-offs we saw in September, there is no shortage of deeply discounted stocks in the market right now.
A lot of companies have been beaten down in share price, including quite a few in my portfolio, but one that looks really interesting to me at the moment is Constellation Brands (STZ), which is my top dividend stock to buy in October.
Constellation Brands owns a portfolio of different beer, wine, and spirits brands. Most notably, they're the company behind Modelo, Corona, and Pacifico — the “big three” when it comes to cervezas. They also own a portfolio of different wines and spirits, including brands like Robert Mondavi Winery and Mi Campo Tequila.
Over the past month, shares of Constellation Brands are down over 13%, which leaves them down close to 18% year-to-date. If we zoom out over the past five years, it gets even worse, with the total return sitting at -41%.
Now there are a few different reasons why the stock has struggled so much, but one of the biggest is that the alcohol industry as a whole has been going through a pretty difficult period. In fact, other major alcohol companies like Brown-Forman (BF.B) and Diageo (DEO) have also seen substantial declines over the past five years.
Source: Seeking Alpha
One of the big trends we've seen during this time is that people just aren't drinking as much as they used to.
This has been especially noticeable among younger consumers. A Gallup study from a few years ago found that only 62% of Americans between the ages of 18 and 34 said they drank alcohol, compared to 72% of people in that same age group about 20 years earlier.
Source: Gallup
Interestingly enough, though, more recent data shows that Gen Z has actually started drinking more.
According to IWSR, the percentage of Gen Z consumers who drink alcohol in the U.S. recently climbed to 71%, which is now pretty much in line with the overall U.S. population. So I don't think it's quite as simple as saying that young people just don't drink anymore.
There does seem to be a broader shift toward moderation though. People are becoming more conscious about their health, so they're drinking less frequently as a result. And when they do drink, they're usually not drinking as much.
There are some other factors playing a role in all of this too. Spending money on alcohol is discretionary, so affordability has become an issue for some people, especially if you're buying drinks out at a bar or restaurant, which can sometimes cost an arm and a leg.
Not to mention, there are also more alternatives today, whether that's non-alcoholic drinks or other substances. Overall, there are just other ways that people are choosing to spend their money.
All of this has had a pretty big impact on the alcohol industry. In 2025 alone, total alcohol consumption by volume in the U.S. fell about 5%, with beer and wine volumes both falling around 6%. You can read more about that here.
Source: Simply Safe Dividends
Despite all of these headwinds though, Constellation’s business has actually stayed pretty resilient.
If we look at the company's earnings per share and free cash flow per share over the past decade, there's been some volatility, and we've seen a little bit of trouble recently. But overall, both have held up pretty well.
And it's a similar story with sales. Revenue was down in the most recent year, but outside of that, sales have moved in the right direction.
Source: Investor Presentation
I think a lot of that resilience comes back to the strength of Constellation's beer portfolio. Modelo is currently the number-one beer in the United States by dollar sales, Corona remains one of the largest beer brands in the country, and Pacifico has continued gaining market share.
That's one of the things I really like about Constellation Brands in particular. I could be wrong about this, but from what I've experienced, if you're reaching for a cerveza, chances are you're going for a Modelo, Corona, or Pacifico — and Constellation owns all three.
Source: Simply Safe Dividends
Now as far as the dividend goes, Constellation Brands currently yields around 3.6%, which is more than twice as high as the five-year average yield of 1.5%.
The dividend also looks well covered, with a payout ratio of around 35%, and the company has now raised its dividend for ten straight years at an average rate of around 6.3% over the past five years.
Source: Simply Safe Dividends
Personally speaking, I have Constellation Brands on my watch list right now and have been spending more time learning about the company. I think the beaten-down share price and the resilience of the underlying business make this a pretty interesting investment opportunity.
Of course, none of the headwinds we talked about have gone away. But despite all of them, I still think there's a lot to like about this company.
Having said that, Constellation Brands isn't the only attractive buying opportunity out there right now. There are plenty of other stocks that look interesting, and I'd love to hear from you: Which discounted stocks do you have your eye on as we make our way into October? Write to me here and let me know.
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"Can you have a successful portfolio with just dividend growth stocks, or do you need some higher-yielding stocks to help feed into it, like O or MAIN? What are your thoughts?"
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First and foremost, it really just depends on how you define success in your portfolio. If your goal is to build a growing stream of passive income, then owning just dividend growth stocks would be perfectly fine for that.
Furthermore, if your ultimate goal is to someday live off your dividend income and you have a long enough time horizon, you can definitely get there with dividend growth stocks as well.
On the other hand, if you want to live off dividends but don’t have as much time to let the dividend snowball effect and dividend growth work their magic, then you’ll probably have to rely a little more on higher-yielding stocks.
Even here, though, you’ll want to make sure those higher yielders can still grow their dividends, even if the growth rate is on the lower end. You still want your income growing over time or else your purchasing power will decline due to inflation.
On another note, if one of your goals is to generate solid total returns over the long run, dividend growth stocks can be great for that too.
Generally speaking, if a company is able to consistently grow its dividend over a long period of time (which it can really only do by continuing to grow its profits and free cash flow), you should see the share price grow over time as well. The two tend to go hand in hand.
Overall, though, I think it’s more than possible to build a successful portfolio — and real long-term wealth — with just dividend growth stocks. In fact, I think it's a great way to go.
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