In March 2025, the U.S. government imposed a 25% tariff on imported aluminum before raising levies to 50% in June. This creates new challenges for companies that depend on metal packaging, such as for companies that sell canned sodas and beers.

Constellation Brands (STZ), the $30.4 billion company behind big names like Corona, Modelo, and Kim Crawford, is feeling the pressure more than most. Constellation has dropped 35% from its 52-week high, falling behind the rest of the consumer defensive sector. The latest quarterly report revealed the significant impact of these tariffs, with revenue down 6% year-over-year to $2.52 billion.

Yet, despite the near-term headwinds, analysts remain notably bullish on Constellation’s prospects as a resilient dividend payer. What’s driving their optimism, and does this dividend stock still deserve a place in your portfolio? Let’s find out.

About Constellation Brands Stock 

Constellation Brands (STZ) is a major player in the beverage industry, known for its popular beer, wine, and spirits brands. Even with this approach, the stock has struggled, dropping more than 32% over the past year and nearly 23% since the start of the year as investors worry about rising costs and weaker earnings. 

This caution shows up in the numbers, with Constellation’s forward P/E at 13.5x, which is lower than the sector average of 16.62x, suggesting the stock is trading at a discount, likely because the market expects more challenges ahead.

The company’s recent financial results show why investors are concerned. In the first quarter of fiscal 2026, net sales fell 6% to $2.52 billion. Operating income decreased 24% to $714 million, and net income declined sharply by 41% to $516 million, as aluminum tariffs and higher costs eroded profits. 

On the bright side, free cash flow rose 41% to $444 million, driven by the timing of brewery investments, and the company continued to buy back shares, returning $381 million to shareholders through June.

The Fundamentals Fueling Long-Term Growth

Constellation Brands isn’t just sitting back while tariffs make things tough. The company recently sold off its mainstream wine brands to focus on higher-growth, higher-margin labels, shifting its attention to wines mostly priced above $15. This move shows Constellation is betting that people want better quality, not just more options. Its beer business is now the main driver, accounting for over 80% of total sales. Modelo Especial, which is now the top-selling beer in the U.S., along with Corona and Pacifico, is expected to help push beer sales up by as much as 3% in fiscal 2026.

The company is also looking outside of alcohol, putting money into Hiyo, a non-alcoholic drink brand, to catch the growing interest in alcohol-free options. This helps Constellation reach new customers and makes the business less dependent on any one part of the market.

These choices help support Constellation’s dividend, even while profits are under pressure. The current yield is 2.4%, backed by a forward payout ratio of 29.8% and five straight years of dividend increases. Its yield is above the consumer staples average of 1.89%, and its steady approach to returning money to shareholders suggests its dividend still has room to grow.

Analyst Views on STZ Stock 

Heading into the second half of the year, Constellation has set its fiscal 2026 earnings outlook between $12.07 and $12.37 per share and is sticking with its targets for operating cash flow of $2.7 billion to $2.8 billion and free cash flow of $1.5 billion to $1.6 billion. 

Even though the company is still dealing with the hit from aluminum tariffs, some of Wall Street’s biggest names are standing by their positive calls. RBC Capital’s Nik Modi has kept his “Buy” rating and a price target of $233, implying 35% upside. 

Jefferies has also upgraded the stock from “Hold” to “Buy” and raised its price target to $205, saying the stock looks too cheap right now to ignore.

This positive view is shared by analysts across the board. The 22 analysts surveyed rate Constellation a consensus “Moderate Buy,” and the average price target sits at $205.95. This implies upside potential of 19% from here. 

Conclusion

Despite the sting from aluminum tariffs and a rough patch in earnings, Constellation Brands is showing the kind of resilience that keeps analysts in its corner. With a sharpened focus on premium, high-margin products and a dividend that’s still solid, the company isn’t just treading water, it’s setting up for a comeback. Wall Street’s bullish outlook and the potential for a strong rebound suggest that, for patient investors, this beaten-down dividend stock could offer both stability and upside as the dust settles.