General Mills Inc's Dividend Analysis
Understanding the Dividend Dynamics of General Mills Inc
General Mills Inc (NYSE:GIS) recently announced a dividend of $0.59 per share, payable on 2024-02-01, with the ex-dividend date set for 2024-01-09. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into General Mills Inc's dividend performance and assess its sustainability.
What Does General Mills Inc Do?
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General Mills is a global packaged food company that produces snacks, cereal, convenient meals, yogurt, dough, baking mixes and ingredients, pet food, and superpremium ice cream. Its largest brands are Nature Valley, Cheerios, Old El Paso, Yoplait, Pillsbury, Betty Crocker, Blue Buffalo, and Haagen-Dazs. In fiscal 2023, 81% of its revenue was derived from the United States, although the company also operates in Canada, Europe, Australia, Asia, and Latin America. While most of General Mills' products are sold through retail stores to consumers, the company also sells products to the foodservice channel and the commercial baking industry.
A Glimpse at General Mills Inc's Dividend History
General Mills Inc has maintained a consistent dividend payment record since 1986. Dividends are currently distributed on a quarterly basis.
General Mills Inc has increased its dividend each year since 1986. The stock is thus listed as a dividend aristocrat, an honor that is given to companies that have increased their dividend each year for at least the past 38 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down General Mills Inc's Dividend Yield and Growth
As of today, General Mills Inc currently has a 12-month trailing dividend yield of 3.48% and a 12-month forward dividend yield of 3.63%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, General Mills Inc's annual dividend growth rate was 3.30%. Extended to a five-year horizon, this rate decreased to 1.80% per year. And over the past decade, General Mills Inc's annual dividends per share growth rate stands at 4.00%.
Based on General Mills Inc's dividend yield and five-year growth rate, the 5-year yield on cost of General Mills Inc stock as of today is approximately 3.80%.
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 2023-11-30, General Mills Inc's dividend payout ratio is 0.55.
General Mills Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks General Mills Inc's profitability 8 out of 10 as of 2023-11-30, suggesting good profitability prospects. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. General Mills Inc's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and General Mills Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. General Mills Inc's revenue has increased by approximately 5.20% per year on average, a rate that underperforms approximately 55.64% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, General Mills Inc's earnings increased by approximately 3.00% per year on average, a rate that underperforms approximately 56.05% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 6.50%, which underperforms approximately 47.89% of global competitors.
Next Steps
In conclusion, General Mills Inc's track record as a dividend aristocrat, coupled with a reasonable payout ratio and a solid profitability rank, presents a compelling case for income-focused investors. While the growth metrics show mixed performance relative to global competitors, the company's consistent dividend increases and respectable yield on cost suggest a degree of reliability in its dividend payments. Investors should weigh these factors against their individual investment goals and consider General Mills Inc's dividend profile in the context of their portfolios. For those seeking additional high-dividend yield opportunities, GuruFocus Premium users can utilize the High Dividend Yield Screener to discover more stocks that may align with their investment strategies.
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.
