If you are looking for investing excitement, you generally don't turn to the prepackaged-food business. Yet industry staple General Mills (NYSE:GIS) is up a surprising 32% so far in 2019, even after the stock took a step back on Wednesday when fiscal 2019 fourth-quarter results underwhelmed shareholders.

Granted, the big run-up this year comes after a dismal performance in 2018, and General Mills is now past the first anniversary of its Blue Buffalo Pet Products acquisition. That means the new high-growth segment will no longer bail out results, putting the onus back on the company's core brands to provide growth. Management is optimistic that will happen, but either way, this stock looks like a solid pick for investors seeking income.

a woman walking four dogs on leashes down a sidewalk.

Image source: Getty images

Fiscal 2019 in review

On the surface, General Mills appeared to have a pretty good year -- especially for a massive global food conglomerate that encompasses everything from cereals to snacks to baking goods. However, all of that growth came from the Blue Buffalo acquisition. Excluding the pet food segment, net sales were down nearly across the board.

Granted, a great deal of those declines were due to a strong U.S. dollar, which reduces revenue when the company converts foreign income back into greenbacks. Nevertheless, organic growth (which negates acquisitions and currency exchange rates) was down in General Mills' largest areas of business.

Segment

2019 Net Sales

Organic Sales Increase (Decrease), YOY

North America retail

$9.92 billion

(1%)

Convenience stores and food service

$1.97 billion

2%

Europe and Australia

$1.89 billion

(1%)

Asia and Latin America

$1.65 billion

6%

Pet food

$1.43 billion

N/A

Data source: General Mills. YOY = year over year.

The result was a human-food business under duress, with pet food coming to the rescue. Because of the lower sales -- especially in North America, where snack foods were a drag -- profits increased less than the top line did. Adjusted earnings (backing out one-time tax benefits realized after U.S. corporate tax reform in late 2017) increased a mere 3.5% in fiscal 2019.

Metric

12 Months Ended May 26, 2019

12 Months Ended May 27, 2018

Change

Revenue

$16.87 billion

$15.74 billion

7%

Gross profit margin

34.1%

34.5%

(0.4 pp)

Operating income

$2.52 billion

$2.42 billion

4%

Adjusted earnings per share

$3.22

$3.11

4%

Data source: General Mills. pp = percentage point.

Snacks, cereal, and yogurt to the rescue?

With General Mills now lapping its first year with Blue Buffalo in the fold, the rest of the business will need to step up its game if top-line growth is going to continue. Blue Buffalo grew sales an impressive 11% during its first year as part of the family, but it only made up about 8.5% of the revenue total in the last year. Even if double-digit growth resumes in the new 2020 fiscal year, it's not going to go very far in offsetting organic sales declines elsewhere.

Here's the bad news: Management thinks Blue Buffalo net sales will grow by 8% to 10% in 2020, so double-digit sales growth may not be in the cards.

However, the company is pleased with its momentum in global cereal sales, specifically calling out Lucky Charms and new Cheerios flavors like blueberry. Yoplait yogurt sales in the U.S. are expected to improve, and fruit snacks have also been a high point for the company. All told, General Mills' top team thinks organic growth of 1% to 2% is in the cards in fiscal 2020; that bodes well for the bottom line.

The stock currently pays a dividend yielding 3.8%, and shares trade for only 13.9 times trailing-12-month free cash flow (money left over after funding basic operations and capital expenditures). This certainly isn't a very exciting business, but General Mills looks like a solid pick for those seeking income, or a core portfolio stabilizer during volatile times.