Conagra Brands Inc's Dividend Analysis
A comprehensive look at the historical performance and future prospects of Conagra Brands Inc's dividend
Conagra Brands Inc (NYSE:CAG) recently announced a dividend of $0.35 per share, payable on 2023-11-30, with the ex-dividend date set for 2023-11-01. As investors anticipate this upcoming payment, it's an opportune time to examine the company's dividend history, yield, and growth rates. This article, using data from GuruFocus, delves into Conagra Brands Inc's dividend performance and assesses its sustainability.
What Does Conagra Brands Inc Do?
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Conagra Brands is a packaged food company that operates predominantly in the United States (over 90% of revenue and profits). The company's revenue is largely derived from frozen food, including brands like Marie Callender's, Healthy Choice, Banquet, and Birds Eye. Conagra also sells snacks, shelf-stable staples, and refrigerated food through brands like Duncan Hines, Hunt's, Slim Jim, Vlasic, Orville Redenbacher's, Reddi-wip, Wish-Bone, and Chef Boyardee. The company primarily sells through the U.S. retail channel, with just 8% of fiscal 2023 revenue coming from international markets and 9% from foodservice.
A Glimpse at Conagra Brands Inc's Dividend History
Conagra Brands Inc has maintained a consistent dividend payment record since 1986, with dividends currently distributed on a quarterly basis. The chart below shows the annual Dividends Per Share for tracking historical trends.
Breaking Down Conagra Brands Inc's Dividend Yield and Growth
As of today, Conagra Brands Inc currently has a 12-month trailing dividend yield of 4.89% and a 12-month forward dividend yield of 5.11%, indicating an expectation of increased dividend payments over the next 12 months. Over the past three years, Conagra Brands Inc's annual dividend growth rate was 15.80%. This rate decreased to 10.70% per year over a five-year horizon, and over the past decade, Conagra Brands Inc's annual dividends per share growth rate stands at 1.90%. Based on Conagra Brands Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Conagra Brands Inc stock as of today is approximately 8.13%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-08-31, Conagra Brands Inc's dividend payout ratio is 0.60. Conagra Brands Inc's profitability rank of 7 out of 10 suggests good profitability prospects. The company has reported net profit in 8 years out of the past 10 years.
Growth Metrics: The Future Outlook
For a company to sustain dividends, it must have robust growth metrics. Conagra Brands Inc's growth rank of 7 out of 10 suggests a good growth trajectory relative to its competitors. However, Conagra Brands Inc's revenue per share and 3-year revenue growth rate indicate a growth rate that underperforms approximately 58.82% of global competitors. The company's 3-year EPS growth rate and 5-year EBITDA growth rate also underperform approximately 66.45% and 67.09% of global competitors respectively.
Next Steps
In conclusion, while Conagra Brands Inc has a strong history of dividend payments and a good profitability rank, its growth metrics raise concerns about the sustainability of its dividend in the long run. Investors should consider these factors when making decisions about investing in Conagra Brands Inc. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
