Ireland is a popular country for international businesses to base at least a portion of their operations. As Ireland is a member state of the European Union, operating there gives companies ready access to that common market. With Ireland’s low corporate tax rate, it’s fairly easy for companies looking for that European presence to justify setting up a portion of their operations there. Of course, Ireland’s physical separation from the rest of the continent does make things a bit difficult logistically, but many global businesses have found a way to make it work.
In honor of St. Patrick’s Day, with St. Patrick being the Patron Saint of Ireland, three Motley Fool contributors went looking for companies with a strong Irish presence to help celebrate the day. They picked Diageo (NYSE: DEO), Medtronic (NYSE: MDT), and Accenture (NYSE: ACN). Read on to find out why, and decide for yourself whether their operations on the Emerald Isle help make them worthy of your investment consideration.
It’s practically the emblem of Ireland
Chuck Saletta (Diageo): Diageo’s Guinness brand and the Republic of Ireland share a very important symbol in common — the “Brian Boru” harp. The beer brand first registered that harp as a trademark in 1876, and Ireland later adopted it as its national emblem in 1922. The key difference between the two? The Guinness harp has the sound board on the left-hand side, while the Irish emblem has it on the right.
With a tie that deep in Irish culture, it should be no surprise that Diageo still maintains a strong presence in Ireland. The company exports around €1 billion (nearly $1.1 billion USD) of beer and Baileys Irish Cream each year from Ireland. It also buys around €275 million in goods and services from within the country and employs around 1,200 people there .
For a sense of just how deep Guinness is integrated into Irish culture, its founder — Arthur Guinness — signed a 9,000-year lease back in 1759 on a property at St. James Gate in Dublin. The company still maintains a brewery there, and with over 8,700 years remaining on its lease, it’s very likely that Guinness will keep an Irish presence for quite some time to come.
Overall, Diageo’s commitment to Ireland is strong and dates back hundreds of years. With very well-known Irish-initiated brands and a multi-millennium lease on some pretty important real estate, the company has a very strong incentive to stay in the Emerald Isle for many more centuries.
This consistently successful medical device maker pays a generous dividend
Eric Volkman (Medtronic): Following its acquisition of Irish peer Covidien in 2015, medical device maker Medtronic established its legal headquarters in the country. Medtronic is one of the most prominent companies in its segment, and its relatively large presence in Ireland makes it one of the nation’s largest businesses, period.
Its operational and executive headquarters are in its native Minneapolis, however, and this positions Medtronic at the heart of the U.S. market. This is advantageous because our population as a whole is aging. And when a population ages, it tends to require more medical care, often involving the myriad devices the company sells.
While the company isn’t the only medical device maker on the scene, it’s well established and is always a major player in its segment.
A strong market for its goods and disciplined management combine to make for a business that throws off a lot of cash. The company’s free cash flow (FCF) habitually lands in the billions of dollars — over the past five years its annual FCF figure hasn’t dipped below $4.58 billion, and at one point soared just above $6 billion.
This pile is more than enough to fund a constantly rising dividend that has been lifted at least once every year for 46 years running, plus relatively modest share repurchase programs. That’s a tough one-two combination to pull off even for the most successful businesses, and it’s a sign that Medtronic knows how to effectively make a buck in its specialty.
Some would consider Medtronic’s payout to be in high-yield dividend territory, at a current rate of 3.2%. That’s notably above the current 1.4% average of S&P 500 index component stocks.
The constant march of innovation
Jason Hall (Accenture): If there are any two things true in business, it’s that technological breakthroughs will continue to happen, and companies will need expertise to figure out how to use that technology to improve their business. As the saying goes, you either evolve, or you die. The problem for most companies is that they dedicate their resources to being really good at what their business is, and don’t often have the capacity to employ experts to keep them at the leading edge of technologies and innovations that power all the other parts of their business.
This is where Accenture comes in. Companies use consultants because they both have an understanding of the industry and competitive landscape of their clients and also are experts in something the company itself isn’t. In the case of Accenture, it’s technology. With its roots in the late 1970s, the company has a long history of helping its clients evolve and leverage new technologies, and has made those technologies part of its strategy.
Over the past decade, that was largely built around mobile computing, the cloud, and analytics. But as we move ahead, AI, robotics, and quantum computing are where Accenture’s customers can leverage its expertise. For example, it secured $450 million in new bookings in the first quarter for generative AI. This may not sound like much against its $18.4 billion in bookings in the quarter, but it’s a strong start to securing its place in this nascent trend.
With corporate headquarters in Dublin, Accenture does benefit from lower corporate taxes. But as it’s a truly global tech consulting giant, investors can benefit from its deep history of tech leadership well into the future.
Today is a great day to look toward Ireland
This St. Patrick’s Day, take a moment to step back from any celebrations to consider the companies that have found a home in the country that is most associated with St. Patrick. As Diageo, Medtronic, and Accenture show, great things can come from small island countries.
Should you invest $1,000 in Diageo Plc right now?
Before you buy stock in Diageo Plc, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Diageo Plc wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.
*Stock Advisor returns as of March 11, 2024
Chuck Saletta has no position in any of the stocks mentioned. Eric Volkman has no position in any of the stocks mentioned. Jason Hall has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Accenture Plc. The Motley Fool recommends Diageo Plc and Medtronic and recommends the following options: long January 2025 $290 calls on Accenture Plc and short January 2025 $310 calls on Accenture Plc. The Motley Fool has a disclosure policy.
3 Companies With Strong Irish Operations was originally published by The Motley Fool
