The following video is part of our "Motley Fool Conversations" series, in which consumer goods editor and analyst Austin Smith discusses topics across the investing world.
In today's edition, Austin gives investors three reasons to consider selling Kraft today. The preeminent Dow stock has been a quintessential blue-chip for many investors, but its reign in the Dow may be over as the company may be forced to exit the index when it splits into two companies. That may not be reason enough to sell, but the potential loss of distribution synergies is. Beyond that, Kraft operates in a difficult, low-margin environment. A large part of Kraft's portfolio is composed of food that consumers have developed a commoditized view of, and many of their touted billion-dollar brands seem out of touch with current consumption trends towards healthier eating. Tepid volume growth isn't confidence inspiring, either.
The Kraft bulls may look at their dividend, which at 3% is market-topping, but it still trails many of Kraft's packaged food competitors, and could be much higher. That's why Kraft was omitted from our list of 9 incredible dividends. You can learn about those companies that made the cut, though -- just click here to read our special, totally free report.
Austin Smith owns shares of PepsiCo and SUPERVALU. The Motley Fool owns shares of PepsiCo, SUPERVALU, and Whole Foods Market. Motley Fool newsletter services recommend PepsiCo and Whole Foods Market. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.