Yahoo Finance Grab General Mills Inc (NYSE:GIS) Today With A Solid 5.1% Dividend Yield
If you are an income investor, then General Mills Inc (NYSE:GIS) should be on your radar. General Mills, Inc. manufactures and markets branded consumer foods worldwide. Over the past 10 years, the US$23b market cap company has been growing its dividend payments, from $0.86 to $1.96. Currently yielding 5.1%, let’s take a closer look at General Mills’s dividend profile.
View our latest analysis for General Mills
What Is A Dividend Rock Star?
It is a stock that pays a stable and consistent dividend, having done so reliably for the past decade with the expectation of this continuing into the future. More specifically:
It is paying an annual yield above 75% of dividend payers
It has paid dividend every year without dramatically reducing payout in the past
Its has increased its dividend per share amount over the past
It can afford to pay the current rate of dividends from its earnings
It has the ability to keep paying its dividends going forward
High Yield And Dependable
General Mills currently yields 5.1%, which is high for Food stocks. But the real reason General Mills stands out is because it has a high chance of being able to continue to pay dividend at this level for years to come, something that is quite desirable if you are looking to create a portfolio that generates a steady stream of income.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. GIS has increased its DPS from $0.86 to $1.96 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. This is an impressive feat, which makes GIS a true dividend rockstar.
The current trailing twelve-month payout ratio for the stock is 54%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a higher payout ratio of 64%, leading to a dividend yield of around 5.4%. However, EPS is forecasted to fall to $3.01 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
Next Steps:
General Mills ticks all the boxes for what I look for in a dividend stock. If you are looking to build an income focused portfolio, this could be one to include. However, given this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. Below, I’ve compiled three relevant factors you should look at:
Future Outlook: What are well-informed industry analysts predicting for GIS’s future growth? Take a look at our free research report of analyst consensus for GIS’s outlook.
Valuation: What is GIS worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether GIS is currently mispriced by the market.
Other Dividend Rockstars: Are there strong dividend payers with better fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
