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Is Kraft Heinz A Buy After The Dividend Cut?

Published Thu, 14 Mar 2019 07:24:59 -0400 on Seeking Alpha

Kraft Heinz (KHC) made headlines recently when it cut its quarterly dividend from $0.625 to $0.40 per share. Management cited deleveraging of the balance sheet, supporting investments in its products, as well as affording the company the ability to divest additional brands as reasons for the cut. In short, the dividend had grown too large for Kraft Heinz to service, and something had to give.
This sent shares down rather violently as they fell from $48 prior to the cut, to just $32 today. Not only has that made the valuation quite cheap, but it has also boosted the yield back to 5%, even on the lower payout amount of $1.60 per share annually. Kraft Heinz is one of less than 400 stocks that yield at least 5%. You can see our full list of high-yield stocks here.
Kraft Heinz has certainly had its issues with earnings growth since it became the company it is today, following the merger of Kraft and Heinz, and we do not believe huge rates of growth are on the horizon. However, the strategic plan is prudent given where the company is today and management is on the right track in terms of where they are focused.
Coupled with a low valuation and a 5% yield, this recent period of weakness in the share price could be a buying opportunity for those with a long-term investing focus, and for those seeking a high dividend yield.
Overview of Recent Events
Kraft Heinz is a processed food and beverage company that owns a vast and diverse portfolio of brands spanning a wide array of... Read more