Which food company has the most lucrative dividend?
Dividends are hot right now, providing investors with some stability in unstable times. MarketWatch announced recently that food makers are raising their dividends, but even though I love a nice dividend increase as much as the next girl, it's important to drill down on industry news like this. Just because the industry as a whole is upping dividends, that doesn't mean any individual company is.
So who are the standouts?
|
Company |
2011 Increase |
Annual Dividend |
Dividend Yield |
|---|---|---|---|
|
Kraft |
0% | $1.16 | 3.4% |
|
General Mills |
0% | $1.12 | 3.0% |
|
Unilever |
15% | $1.31 | 4.1% |
|
H.J. Heinz |
6.7% | $1.92 | 3.6% |
|
Flowers Foods |
12.5% | $0.60* | 2.8% |
|
J.M. Smucker |
10% | $1.76 | 2.3% |
|
Kellogg |
6% | $1.72 | 3.1% |
*Following the upcoming 3-2 stock split.
Kraft puts in a disappointing performance in light of the industry trend. General Mills only looks bad, since the company traditionally raises its dividend in the fourth quarter (ending in May), so be on the lookout shortly. Unilever posts the highest dividend increase. The company is much more than a food company, and its diversity makes it arguably the safest investment on the list in tumultuous times. Flowers Foods also stands out. It has among the lowest dividends but the second-highest increase -- pretty impressive for an up-and-coming business.
Big picture
Before we hop onboard with Unilever, J.M. Smucker, or any of the other stocks, we want to consider the past five years of dividend history for this group. Huge increases are great, but they’re even better when packaged with a tradition of sizable boosts.
|
Company |
5-Year Average Annual |
|---|---|
| Kraft | 5.3% |
| General Mills | 10.5% |
| Unilever | 6.2% |
| HJ Heinz | 8.4% |
| Flowers Foods | 24.6% |
| J.M. Smucker | 9.0% |
| Kellogg | 7.9% |
Source: Capital IQ, a division of Standard & Poor's.
Again, a 0% increase so far this year is nothing to worry about for General Mills; it has steadily raised its dividend an average of 10.5% annually over the past five years. Kraft is up 5% despite no dividend increase since 2008.
Heinz, Smucker, and Kellogg all have very attractive dividends and a nice history of substantial increases. Heinz raised its dividend only 6% this year, but it has gone up 50% in total since 2006, a stat sure to please any dividend investor.
Bottom line
When industry trends like this hit the news, make sure you're looking at the whole picture. There’s a chance that your company isn’t participating or is only doing it for show. Also keep in mind that a flashy one-time dividend increase may not be sustainable. Keep your eye on the company's dividend history, which puts quarterly increases in perspective and can give investors a better idea of what to expect in the future.
Interested in dividend stocks? Get our free report, "13 High-Yielding Stocks to Buy Today."
