The board of directors at Kellogg Company (K) recently announced plans of a 6.5% increase in the consumer food company’s dividend — the 358th quarterly dividend rate hike since 1925.
The dividend will increase from 46 cents to 49 cents per common share, equivalent to an annual dividend of $1.93 per share for fiscal 2014, up from $1.80 in fiscal 2013. The new dividend, payable from Jun 16, 2014, will yield 2.9% annually.
Kellogg has consistently enhanced shareholders’ return via share repurchases and dividends. In Feb this year. Kellogg approved a new share repurchase program of up to $1.5 billion.. A solid cash position allows the cereal maker to pay regular dividends and buy back shares.
The new buyback program will expire on Jan 2, 2016 which marks the end of fiscal 2015. The latest authorization replaces the existing buyback plan, approved in Apr 2013, to buy back up to $1 billion shares through Apr 2014. These programs will lower share count and are expected to boost earnings per share in 2014.
On the same day, Kellogg released a press release where it announced that it is set to start the New Year (fiscal 2014) with John A. Bryant, present president and chief executive officer, in a new role — Chairman of the Board — effective Jul 1. Bryant replaces James M. Jenness who is stepping down after a 40-year tenure at the company.
Kellogg is expected to report first-quarter fiscal 2014 earnings results on Thursday, May 1, 2014.
Kellogg carries a Zacks Rank #3 (Hold). The company’s solid brand positioning, its geographic diversity and significant investments behind innovation, marketing and supply-chain initiatives are encouraging. Moreover, we commend the company’s growth potential, diversification and international presence that the Pringles deal provides. However, the strained cereal business, pressures in Europe and rising input costs are the headwinds.
Other Stocks to Consider
Some other food companies you may want to consider include B&G Foods Inc. (BGS), TreeHouse Foods Inc. (THS) and McCormick & Company, Inc. (MKC).While B&G Foods sports a Zacks Rank #1 (Strong Buy), McCormick and TreeHouse have a Zacks Rank #2 (Buy).
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