Among dividend-paying stocks, one of the most famous is cereal king General Mills (NYSE:GIS). Its reputation is very well-deserved, because the company has one of the longest streaks of paying, and even increasing, its quarterly dividends. General Mills and its predecessor companies have paid uninterrupted dividends for an amazing 115 years. This demonstrates the strength and staying power of the company's business.

There's no doubt that General Mills is a great company. Whether it's a good stock to buy now, however, is a different question. Even great companies can sometimes turn out to be poor investments. How well a stock performs for an investor relies on the investor buying in at an advantageous price. With that in mind, let's dig a little deeper into how General Mills is performing this year, and whether the stock is a good buy now, or if investors would be wise to wait on the sidelines. The stock currently trades around $50 and has a dividend yield of about 3.2%.

Steady growth last year, but warning signs appear
General Mills has built a long track record of reliable growth, thanks to its strong brands and the fact that it operates in food, which is a fairly stable industry. The company maintained this reputation in fiscal 2014, which ended in June. For the year, adjusted profits, which strip out one-time items like restructuring costs, integration costs from acquisitions, and gains on divestitures, increased 4%, to $2.82 per share. Net sales grew just 1% year over year, to $17.9 billion.

In response to sluggish sales growth, management outlined a plan at the end of the fiscal year to keep earnings growth intact. This included a significant cost savings program. Cost savings from this initiative are expected to exceed $400 million in fiscal 2015. In addition, the company plans to roll out some new products.

Unfortunately, this fiscal year hasn't gotten off to a good start. Constant-currency sales, which exclude the effects of currency fluctuations, decreased 1% in the fiscal 2015 first quarter. Adjusted earnings per share fell 13% year over year. The key culprit for this was the United States, where management stated that industry trends were weak. Sales fell 5% in the U.S. last quarter, and the company endured higher merchandising expense.

Management reiterated its full-year expectations, which call for mid-single digit sales growth on a percentage basis. Adjusted earnings growth should come in at high single digits. Whether General Mills can achieve its goals is somewhat questionable, given the difficulties encountered in the first quarter.

Is the stock a buy right now?
General Mills offers a 3.2% dividend yield, which is attractive for income investors. However, the stock does not look like a bargain right now. This has to do with the company's poor financial results to start the fiscal year, as well as its current valuation. General Mills trades for about 19 times trailing earnings, and 16 times forward earnings, which is far from cheap given its operating challenges.

Those who are primarily interested in General Mills' dividend, however, have little to worry about. The company should have no trouble continuing to pay its dividend. General Mills generated $1.8 billion of free cash flow in fiscal 2014, and paid $983 million in dividends. That means the company distributed just slightly more than half of its free cash flow last year. Its financial condition deteriorated in the first quarter, however. General Mills distributed $254 million in dividends, but generated only $180 million of free cash flow. This was primarily due to operating cash flow falling by 13.5% year over year.

This will likely not be the case for the full year, but continued struggles may make it difficult for General Mills to keep its dividend growth rate intact. General Mills has increased its dividend by 11.7% compounded annually during the past five years, but its most recent increase was 8%, and its next raise might be below that if its operating problems persist.

The bottom line is that General Mills is a strong dividend stock with a solid yield, but investors shouldn't count on dramatic increases. In addition, total return potential may be limited considering its stagnating growth, and valuation that is not exactly cheap. However, for those who need current income, General Mills can still satisfy your hunger for dividends.

Bob Ciura has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.