GENERAL MILLS INC. (New York symbol GIS; www.generalmills.com) is one of the world’s largest food makers. Its top brands include Big G (cereal), Green Giant (canned and frozen vegetables), Pillsbury (baking dough), Old El Paso (tacos), Progresso (soups and salads) and Yoplait (yogurt).
In its fiscal 2014 third quarter, which ended February 23, 2014, the company’s sales fell 1.2%, to $4.38 billion from $4.43 billion a year earlier. General Mills raised its prices to cover rising costs, but it sold less food, partly because unusually cold winter weather kept U.S. shoppers at home. Unfavourable currency exchange rates, particularly in Venezuela, also weighed on sales.
Earnings rose 3.1%, to $410.6 million from $398.4 million. Per-share earnings gained 6.7%, to $0.64 from $0.60, on fewer shares outstanding. However, if you exclude unusual items, such as gains on hedging contracts General Mills uses to lock in wheat and corn prices, per-share earnings fell 6.1%, to $0.62 from $0.66.
Dividend stocks: Company has maintained dividend for 115 straight years without ever cutting its payout
General Mills invested more in its U.S. yogurt operations—including in new products and advertising—which further hurt its earnings. However, this spending is helping General Mills increase its yogurt sales and market share.
The company continues to develop new foods for health-conscious consumers. For example, it is adding more gluten-free versions of its popular Betty Crocker baking and dessert mixes. As well, it will soon start selling Cheerios cereal that contains no genetically modified organisms, which are seeds that scientists have developed to resist pests and improve crop yields.
The company recently raised its quarterly dividend by 7.9%, to $0.41 a share from $0.38. The new annual rate of $1.64 yields 3.2%.
This was the 15th time General Mills has raised its dividend since 2004. The company has paid dividends for 115 straight years and has never cut its payout.
In the latest edition of Wall Street Stock Forecaster, we look at General Mills’ outlook for 2014 and whether its new initiatives will revive its profit growth. We conclude with our clear buy-hold-sell advice on this stock.
If you’re a member of Pat’s Inner Circle and you’d like to ask a question about today’s article, please go to the question page reserved for you (be sure you’re logged in first). Click here to ask your question.
COMMENTS PLEASE—Share your investment experience and opinions with fellow TSINetwork.ca members
Even stocks with a solid dividend history are sometimes compelled to cut their dividend payouts. What is your experience with stocks like these? Have you owned stocks that came back from a dividend cut to restore their profits and their dividends? Have you had stocks for whom the dividend cut was a signal that the company was headed for trouble?
Comments
Alan
Thank you for your article on General Mills. I appreciate your interest in the food processors – an under-appreciated sector of our manufacturing industry.
I have been watching Conagra Foods for some time – a very similar company to General Mills. Its growth in revenues and profitability as well as positive (though not stellar) book value trend over the last several years makes it of increasing interest.
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Thank you for your article on General Mills. I appreciate your interest in the food processors – an under-appreciated sector of our manufacturing industry.
I have been watching Conagra Foods for some time – a very similar company to General Mills. Its growth in revenues and profitability as well as positive (though not stellar) book value trend over the last several years makes it of increasing interest.