I listened to BGS's ICR XChange Conference. Their story sounds okay to me. They seem to be able to absorb raw material cost increases (which are less than for less-diversified CPG companies), at the expense of some organic growth to the top line without damaging the bottom line. Growth from acquisitions (Cream of Wheat) seems good and likely to improve over a 1 year horizon as distribution is re-established; this should also benefit the bottom line.
To me the biggest concern seems the high dividend per share compared to their EPS. They seemed to give a credible story on that, though: strong net cash flow compared to EPS due to high margins, low capital investment needs, and non-cash amortization of intangible goodwill (from acquired brands) baked into the EPS numbers (and it's tax deductable, yet another cash benefit), strong enough for a net increase in cash balances even after debt payments and dividends.
Am I interpreting this right, or is there really some hidden danger lurking that could cause EPS to not keep growing (organically & via additional acquisitions) until it's eventually comfortably above the dividend per share?
Whats the worst that can happen? A dividend cut? Even if they do cut the dividend(which I dont foresee them doing) this is still a solid company that will grow via acquisitions. I mentioned this earlier but I think that this stock could easily double with one or two big name acquisitions.