Food giant General Mills (NYSE:GIS) isn't the flashiest stock on Wall Street, but for buy-and-hold investors it's been a long-term market beater, as you can see below. Few other companies can boast a product line of familiar brands and staples that consumers buy on a weekly basis. The company's growth has slowed recently, but there are three big reasons investors should still be bullish on this stock.
Everybody needs food
The first thing any investor should like about General Mills is that it makes products people need no matter their economic situation. Cheerios, Yoplait, Green Giant, and Pillsbury are just a few of the major brands General Mills owns. This core of products creates a consistent business that investors can count on in good times and bad.
In fact, the company tends to do well in tough economic times as people eat out less and cook at home more. Sales have been down in recent quarters, but in 2009 and 2010, when the economy was in shambles, General Mills was one of the small number of companies that was still growing.
It's basically a recession-proof business, and a nice foundation to build on for investors looking for long-term consistency from their stocks.
A strong commitment to shareholders
General Mills has a healthy 3.3% dividend yield, but that's not the only way it returns capital to shareholders. The company has spent billions on stock buybacks in the last few years, pushing its outstanding share count down 29% in the last decade.
The combination of dividends and share buybacks from a business with consistent profitability is a recipe for long-term success for patient investors.
Quietly winning food trends
General Mills has struggled to keep up with some food trends, particularly in the move toward organic foods. The main unit struggling to keep up is baking products such as Betty Crocker.
But the company is also winning in other broad trends. Snack and yogurt sales spiked by 14% and 10%, respectively, in the first quarter, trends that should continue as consumers look for fast, healthy foods when they're not eating out.
Over the years, General Mills has made many adjustments to keep up with what people like to eat, including the acquisition of natural and organic food company Annie's last year. If General Mills can continue to adjust to consumer trends it should return to sales growth, as well as position itself well for the next time the country hits a rough economic patch.
There are few companies investors can be highly confident will be around to generate positive returns a decade, much less a century, from now. General Mills is one of those stocks.
Travis Hoium 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.