More Road Trip-Inspired Dividend Digging
Last week, I was in Georgia for a few days. A friend reminded me again that if I wanted to go out on his boat I was running out of warm days. Sometimes I forget that summer ends outside of South Florida.
Since I like to drive, I rented a car and headed out. Five-and-a-half hours later—and still two hours from my destination—I passed a Tyson Foods (TSN) distribution center. It got me thinking about its dividend yield since I haven’t checked in on the stock for a while.
Giant consumer staple companies like Tyson Foods make great Bedrock Income holdings. Whether the economy is heading up or down, people still buy the essentials. And these big companies reward their shareholders with dividends.
Tyson Foods is a giant in the meat production world, processing 20% of the meat consumed in the US. The company sells over $13 billion of chicken, beef, pork, and prepared foods in a calendar quarter.
I knew the company has paid a dividend for over 30 years, and has worked hard over the past decade to raise the dividend every year. Add to that a 23% drop in shares over the past five years, and I thought it might finally have a decent dividend yield. Unfortunately, the yield is just 2.9%, below our 3.5% minimum.
So, I don’t think you should add TSN to your Bedrock Income portfolio right now. But that wasn’t the most interesting part of my late-night research.
Is Lab-Grown Meat the Future of Protein?
I quickly had over 30 tabs opened in my web browser, and came across this eye-popping figure:
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The lab-grown meat industry is projected to reach a value of $1.99 billion by 2035.
Wait… what? I knew that last summer the USDA granted approval of cell-cultured meat just a year after the FDA declared it was safe to eat. But I didn’t realize we officially had a “lab-grown meat industry.”
Lab-grown meat, otherwise known as cultured or cultivated meat, has been around since the early 2000s. And in 2013, the first hamburger patty was created from tissue grown outside of an animal.
Over the past 2 years, restaurants in San Francisco and DC were serving lab-grown meat. Today, however, it is no longer on the menu. The FDA and USDA may have given it their blessing, but Singapore currently looks like the only place to pick up this meat.
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Despite this, certain states are voicing their concerns. Florida, Alabama, and Iowa have already taken a stand against cultivated meat. And other states are introducing legislation as well.
Globally, more than 150 companies are working on different lab-grown meats. I guess that’s enough to call it an industry.
There are even publicly traded companies in the cultured meat industry such as Steakholder Foods Ltd. (STKH), an ADR listed on the Nasdaq. ADR stands for American Depositary Receipt and represents shares of a non-US company that trade on a US exchange.
STKH is an Israel-based company formerly known as MeatTech3D. The company is a pioneer of 3D-printed fish and meat that are 100% plant based.
There are currently two growth methods used in the industry. Some companies produce lab-grown meat that is 100% plant based, while others are based on meat from animal cells. I think the latter is going to be more popular.
Either way, the industry is still too new to know if it will catch on with consumers.
Tyson Could Be Your Exposure to This Emerging Trend
I’m not sure I’m convinced that cultured meat is the future. I’m going to put lab-grown meat in the same category as electric cars—fine for some, but not for me. Unlike electric cars, I will remain on the investing sidelines with this one.
Tyson has significant investments in Upside Foods (formerly Memphis Meats) and Future Meat Technologies. These investments aren’t new, as TSN has been eyeing this industry since at least 2018.
As a giant in the meat industry with large investments in the lab-grown meat segment, I think TSN is solidly positioned to profit if demand for lab-grown meat takes off. The question is can these products become consumer staples and not just novelties to try once at a restaurant so you can say you’ve done it.
As I said, I’m going to pass on TSN. But if you think the lab-grown meat industry has a future, and you want dividend income along the way, I think TSN will be your best bet.
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For more income now, and in the future,
Kelly Green
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