This is Why General Mills (GIS) is a Great Dividend Stock
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
General Mills in Focus
Headquartered in Minneapolis, General Mills (GIS) is a Consumer Staples stock that has seen a price change of 12.44% so far this year. The maker of Cheerios cereal, Yoplait yogurt and other packaged foods is currently shelling out a dividend of $0.54 per share, with a dividend yield of 2.85%. This compares to the Food - Miscellaneous industry's yield of 0.24% and the S&P 500's yield of 1.73%.
In terms of dividend growth, the company's current annualized dividend of $2.16 is up 5.9% from last year. General Mills has increased its dividend 2 times on a year-over-year basis over the last 5 years for an average annual increase of 1.13%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Right now, General Mills's payout ratio is 52%, which means it paid out 52% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for GIS for this fiscal year. The Zacks Consensus Estimate for 2022 is $4 per share, which represents a year-over-year growth rate of 1.52%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, GIS is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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General Mills, Inc. (GIS) : Free Stock Analysis Report
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