Published Fri, 17 Feb 2017 01:38:04 -0500 on Seeking Alpha
General Mills (NYSE: GIS) is a decent company that has suffered some missteps in the yogurt space. At the moment it is trading at a reasonable discount to the overall market as a result of this and other factors, and I think the current valuation presents investors with an excellent opportunity. While the shares are relatively inexpensive, I think the most compelling reason to buy this company are the dividends.
There's very little growth on display at General Mills. For instance, revenue has grown at a CAGR of about 2% since 2011, and net income has basically been flat in that time. This isn't a growth name, and perhaps that's why the shares trade at a slight discount. It may not have much in the way of growth, but it's clear that General Mills treats its shareholders right. Since 2011, management has returned approximately $12.6 billion to shareholders in the form of stock buybacks ($6.6 billion) and dividends ($6.04 billion). The payout ratio is relatively high, but there's little immediate cause for concern about liquidity.
Modeling The Dividend
Dividends paid out by General Mills have grown dramatically, especially over the past decade. Over the past ten years, they have shown a CAGR of ~9.1%, and that is the growth number that I will use as the basis for my dividend forecast. I'll use 9% as a best case, 7% as a mediocre case and 4.5% dividend growth as a catastrophic case. Even under the most conservative... Read more
|Stock name||Last trade||P/E||Earnings/Share||Dividend/Share||Dividend yield|
Older articles featuring General Mills (GIS):General Mills: A Reliable Dividend Machine
Repairing The Foundations Of The Dividend House And Millennial Millions DGI Portfolios
John And Jane - January Dividend Income Tracker
Baby DivHut Dividend Income Portfolio Update Q4 2017
Dividend Growth Check-Up: 2017
The 1% Dividend Growth Model Portfolio Will Break The Mold And Transform Opinions
It's Time For The Next Generation Dividend Growth Model Portfolio
My Dividend Growth Portfolio - Q4 2017 Summary
Dividend Income Was Robust In 2017
John And Jane - December Dividend Income Tracker