Packaged food company, B&G Foods, Inc. (BGS) recently announced a 7.4% increase in quarterly cash dividend to 29 cents per share of common stock. On an annualized basis, the dividend stood at $1.16 per share (up from $1.08 per share), with an annualized yield of 4.1%.The dividend is payable on January 30, 2013 to stockholders of record as of December 31, 2012. This is the 33rd consecutive quarterly dividend announced by the company following its October 2004 initial public offering (:IPO) .
B&G Foods recently closed a public offering of 4,173,540 shares of its common stock, including an over-allotment option for 544,375 shares. The net proceeds from the offering – approximately $120.3 million after discounts and offering expenses – will be used for meeting general corporate expenses, which may include repayment of the company’s long-term debt and expenditures towards the acquisition of the New York Style and Old London brands and any acquisitions that may take place in the future.
A peer of General Mills Inc. (GIS), B&G Foods focuses on small brands that have strong margins and generate less than $100 million in sales. Most of the time, these are smaller brands from large food companies, which have limited competition. B&G Foods’ investments in these brands help to generate huge free cash flow. The shareholders benefit from the strong free cash flow in terms of dividends and stock appreciation.
B&G Foods, Inc carries a Zacks #3 Rank that translates into a short-term ‘Hold’ rating. Longer-term, we are maintaining our Neutral recommendation on B&G Foods, Inc.
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