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 Safe Dividend Stock Down 15% Since July
My Favorite Millennial's Dividend Growth Portfolio
Consumers Defend 'Safe' Dividend Dogs From March Malaise And Packaged Foods Win
Dividend Income Update: February 2017
Can 20 Financial Ratios Be Used To Find Dividend Growth Companies That Outperform The Market?
Dividend Stock Food Fight: General Mills Or Kellogg?
Free Market Capitalist January Dividend Income
Consumer Defensive Sector Packages 34 'Safe' Dividend Dogs With Love
'Yield On Cost' Can Be Misleading For DGI Investors
What Do Rising Interest Rates Mean For Dividend And Income Investors?