Our analysis is based on comparing General Mills, Inc. with the following peers – Kellogg Company, Mondelez International, Inc. Class A, TreeHouse Foods, Inc., J. M. Smucker Company, Hain Celestial Group, Inc., Conagra Brands, Inc., Pinnacle Foods, Inc., Post Holdings, Inc. and Standard Foods Corporation GDR 144A (K-US, MDLZ-US, THS-US, SJM-US, HAIN-US, CAG-US, PF-US, POST-US and STFXY-US).
General Mills, Inc.’s dividend yield is 3.38 percent and its dividend payout is 69.31 percent. This compares to a peer median dividend yield of 2.49 percent and a payout level of 66.82 percent. This type of dividend performance might make it a good stock for dividend investors. However, the company’s average dividend quality score of 58 out of a possible score of 100, points to some weakness in the sustainability of its robust payout ratio, and makes its less attractive for dividend investors seeking current income.
Dividend Quality Overview
- Over the last twelve months (prior to May 31, 2017), GIS-US paid a high quality dividend, which represents a yield of 3.36% at the current price.
- Dividend quality trend has not been consistent over the last five years. Dividends were paid during each of these years — of these 4 were high quality and 1 was medium quality.
- The ending cash balance is less than the last full year dividend payment and cannot be relied on to cushion any significant reduction of cash flows in the future.
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Over the last twelve months (prior to May 31, 2017), GIS-US paid a high quality dividend.
The source of the company’s cash to support the dividend paid over the last twelve months is operating cash flow (coverage of 2.04x), investing cash flow (coverage of -0.57x), issuance cash flow (coverage of -0.45x) and twelve-month prior cash (coverage of 0.67x), for a total dividend coverage of 1.68x.
GIS-US‘s issuance cash flow includes outflows from net share buybacks (coverage of -1.36x). Thus, the total coverage including share buybacks is 3.03x, which reflects our assumption that the cash paid for share buybacks is discretionary and could instead be used to pay dividends.
These coverage ratio factors imply that the firm’s dividends are wholly paid from operating and investing cash flows net of any debt repayments, which suggests a high dividend quality.
|Dividend Yield (%)||2.76||2.98||3.03||2.86||3.43||3.38|
|Dividend Payout (%)||47.31||54.77||84.77||64.26||69.31||69.31|
A complete list of metrics and analysis is available on the company page.
General Mills, Inc. engages in the manufacture and marketing of branded consumer foods sold through retail stores. It operates through the following segments: U.S. Retail, International, and Convenience Stores & Foodservice. The U.S. Retail segment operates grocery stores, mass merchandisers, membership stores, natural food chains, and drug, dollar and discount chains throughout the United States. This segment products include ready-to-eat cereals, refrigerated yogurt, ready-to-serve soup, dry dinners, shelf stable and frozen vegetables, refrigerated and frozen dough products, dessert and baking mixes, frozen pizza and pizza snacks, grain, fruit and savory snacks, and a wide variety of organic products include granola bars, cereal, and soup. The International segment consists of retail and foodservice businesses outside of the United States. This segment products include ready-to-eat cereals, shelf stable and frozen vegetables, dry dinners, refrigerated and frozen dough products, dessert and baking mixes, frozen pizza, snacks, refrigerated yogurt, and grain and fruit snacks. The Convenience Stores & Foodservice segment products include cereals, snacks, yogurt, unbaked and fully baked frozen dough products, baking mixes, and flour. The company was founded by Cadwallader C. Washburn in 1866 and is headquartered in Minneapolis, MN.
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