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Conagra Brands: This Overlooked Dividend Stock Is Paying Over 3%

Published Mon, 14 Dec 2020 17:20:20 -0500 on Seeking Alpha

Seeking AlphaDividend Ideas | Consumer Conagra Brands: This Overlooked Dividend Stock Is Paying Over 3%Dec. 14, 2020 5:20 PM ET|| About: Conagra Brands, Inc. (CAG), Includes: CPB, GIS, KHC, SJMby: Psycho AnalystPsycho Analyst Long Only, Value, Growth At Reasonable Price, Dividend InvestingSummaryThe popularity of Dividend Growth investing has raised the prices of many Consumer Staples Sector stocks so that they are now overvalued.
Companies that have a long history of paying dividends but have periodically frozen them deserve another look.
Conagra Brands is a good example of an overlooked dividend payer currently trading at fair value which might also provide modest capital gains going forward.
Like many of you, I have let the near-zero yields paid by CDs make me allocate a larger amount of my fixed income portfolio into staid and sober, dividend paying stocks.
But because I have become convinced that valuation matters greatly when buying that kind of stock, I have found very little to buy these past few months, even though quite a few of the CDs in my five year ladder are coming due and that money needs to be put to work producing replacement income.
The valuations of the more popular dividend-centered ETFs are too high to attract me right now, as I explained in my articles on the Vanguard Dividend Appreciation Index (VIG) and The Vanguard High Dividend Yield Index (VYM). So I have been cautiously buying shares of individual dividend stocks that I plan to treat as a replacement for a five-year CD.
My requirements for selecting a dividend stock have been that the company be mature, with a large market capitalization, and that it pay a dividend equal to or higher than the 2.5% yield I was getting from my CDs. I will settle for a lower yield, nearer 2% if the company's earnings growth rate is such that I feel confident that in five years the company's total return would give me the same result at a 2.5% yield or better. I wanted to invest in a diversified... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
KRAFT HEINZ 29.03   0.0 0.00 1.60 5.52
GENERAL MILLS 54.09   18.6 2.90 1.96 3.59
JM SMUCKER 105.85   22.4 4.72 3.52 3.30
CAMPBELL SOUP 47.15   68.3 0.69 1.40 3.05