U.S. Markets open in 7 hrs 4 mins
  • S&P Futures

    3,217.75
    -13.50 (-0.42%)
     
  • Dow Futures

    26,584.00
    -101.00 (-0.38%)
     
  • Nasdaq Futures

    10,756.00
    -73.00 (-0.67%)
     
  • Russell 2000 Futures

    1,445.40
    -1.30 (-0.09%)
     
  • Crude Oil

    39.60
    -0.33 (-0.83%)
     
  • Gold

    1,857.80
    -10.60 (-0.57%)
     
  • Silver

    22.21
    -0.90 (-3.87%)
     
  • EUR/USD

    1.1658
    -0.0004 (-0.0350%)
     
  • 10-Yr Bond

    0.6760
    0.0000 (0.00%)
     
  • Vix

    28.58
    +1.72 (+6.40%)
     
  • GBP/USD

    1.2701
    -0.0025 (-0.1943%)
     
  • BTC-USD

    10,325.39
    +75.92 (+0.74%)
     
  • CMC Crypto 200

    217.64
    +3.67 (+1.72%)
     
  • FTSE 100

    5,899.26
    +69.80 (+1.20%)
     
  • Nikkei 225

    23,087.82
    -258.67 (-1.11%)
     

Conagra Brands, Inc. (NYSE:CAG) Looks Interesting, And It's About To Pay A Dividend

Simply Wall St

Conagra Brands, Inc. (NYSE:CAG) is about to trade ex-dividend in the next 4 days. You will need to purchase shares before the 3rd of August to receive the dividend, which will be paid on the 3rd of September.

Conagra Brands's next dividend payment will be US$0.21 per share. Last year, in total, the company distributed US$0.85 to shareholders. Based on the last year's worth of payments, Conagra Brands has a trailing yield of 2.3% on the current stock price of $37.29. If you buy this business for its dividend, you should have an idea of whether Conagra Brands's dividend is reliable and sustainable. As a result, readers should always check whether Conagra Brands has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Conagra Brands

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Conagra Brands paid out a comfortable 49% of its profit last year. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Thankfully its dividend payments took up just 28% of the free cash flow it generated, which is a comfortable payout ratio.

It's positive to see that Conagra Brands's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

historic-dividend
historic-dividend

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Fortunately for readers, Conagra Brands's earnings per share have been growing at 11% a year for the past five years. Earnings per share have been growing rapidly and the company is retaining a majority of its earnings within the business. This will make it easier to fund future growth efforts and we think this is an attractive combination - plus the dividend can always be increased later.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, 10 years ago, Conagra Brands has lifted its dividend by approximately 0.6% a year on average. It's good to see both earnings and the dividend have improved - although the former has been rising much quicker than the latter, possibly due to the company reinvesting more of its profits in growth.

The Bottom Line

From a dividend perspective, should investors buy or avoid Conagra Brands? It's great that Conagra Brands is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. It's disappointing to see the dividend has been cut at least once in the past, but as things stand now, the low payout ratio suggests a conservative approach to dividends, which we like. It's a promising combination that should mark this company worthy of closer attention.

On that note, you'll want to research what risks Conagra Brands is facing. To that end, you should learn about the 4 warning signs we've spotted with Conagra Brands (including 1 which is concerning).

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.