Conagra Brands' (CAG 4.68%) stock has rallied nearly 15% so far in 2026, as investors have shifted out of technology stocks and into other sectors.
Conagra's price advance is in line with the broader consumer staples sector. The problem is that Conagra's business isn't industry-leading.
Here's how you might want to think about the buy, sell, or hold call on Conagra Brands.
Image source: Getty Images.
Buy Conagra Brands?
The big reason to buy Conagra is its huge 7% dividend yield. That is going to attract a lot of dividend investors. The fact that Conagra is a consumer staples company will also be attractive, as the sector is generally considered a safe haven during periods of Wall Street turbulence. Food makers like Conagra provide essential products at modest prices that need to be bought on a fairly regular basis.
From a high-level view, Conagra looks like an attractive investment. However, problems start to arise when you start to dig into the story just a little bit.
Sell Conagra Brands?
For example, the dividend payout ratio isn't meaningful right now because the company has posted a loss. Shortly before the losses, however, the payout ratio was above 100%. That's a worrying level that suggests the dividend may not be as safe as it appears.
The loss in the fiscal second quarter of 2026 needs to be examined a bit. The $1.39 loss per share was largely tied to "certain non-cash goodwill and brand impairment charges." If you take those charges out, the company would have earned $0.45 per share, which would have easily covered the $0.35-per-share quarterly dividend. Those charges, however, are an admission that the company's food brands aren't industry leaders. Thus, the worrying payout ratio remains an indication of the risks investors face when owning Conagra.
NYSE: CAG
Key Data Points
If you are looking to minimize risk during a market rotation, Conagra probably isn't the best fit.
Hold Conagra Brands?
If you bought Conagra and have benefited from the swift price advance in 2026, you might want to consider taking profits and shifting into a larger, higher-quality consumer staples competitor, like Coca-Cola (KO 0.10%). However, you'll have to give up some yield to make a move like that.
Still, Conagra's organic sales have been weak, falling 3% in the fiscal second quarter of 2026, as the company attempts to deal with industrywide headwinds, including healthier eating habits and budget-conscious consumers. By comparison, Coca-Cola's organic sales have held up relatively well, rising 5% in the comparable quarter.
Buying and holding Conagra stock is probably only appropriate for more active, aggressive dividend investors.
