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Kellogg: Better Options For Dividend Growth

Published Wed, 16 May 2018 10:46:13 -0400 on Seeking Alpha

Many investors are invested in Kellogg Company (K) for the generous dividend it pays out. Payouts on its now 3.5+% yield have increased for well over a decade. However, growth hasn't been running smoothly for this large cap of late. I would implore investors to reject the belief that past performance is indicative of future results. Companies as well as customer spending and eating habits can change over time.
This is exactly what has happened to this company with respect to its cereal offerings. In fact, many multinationals (where sugar is a prime ingredient in their products) have had to pivot in order to stay relevant. Coke (KO) a while back (when sugar was really beginning to be linked to obesity in the media) handled this very well in their marketing in my opinion. KO actually agreed with the sugar hard-line and promoted smaller sizes and zero sugar options. Overnight it seemed this beverage behemoth went from no. 1 enemy with respect to obesity to "health conscious" drink provider. In effect, it used the downturn and bad press to its advantages.
With respect to Kellogg, though, I don't get the same vibrations. The company has tried to pivot with the likes of its "Pringles" brand in its snack segment in the belief that these types of offering should appeal to customers more than cereals over the long term. This though is a worry unto itself. Cost cutting has been the core response to the drop off in growth as minimal work has been done to... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
KELLOGG 66.20   18.3 3.62 2.16 3.13


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