General Mills Hikes Dividend by 8% - Analyst Blog

The board of directors of General Mills Inc.GIS recently announced an 8% increase in its dividend — the 15^th quarterly dividend rate hike since 2004.

The quarterly dividend was increased from 38 cents to 41 cents per common share, totaling to a total annual payout of $1.55 per share for fiscal 2014, up 17% from $1.32 paid for fiscal 2013. The quarterly dividend will equal an annual dividend of $1.64 which will yield 3.2% annually.

The quarterly dividend of 41 cents for the fourth quarter of fiscal 2014 will be paid on May 1, 2014 to shareholders of record as on Apr 10.

General Mills has consistently enhanced shareholders' return via share repurchases and dividends. In fact, over the past five years, General Mills delivered a compound annual return of 13% more than double the S&P 500 return of 6%. Dividends have increased at a compounded growth rate of 11% over the past five fiscal years. The company increased its annual dividend payments for fiscal 2011 by 17%, for fiscal 2012 by 8% and for fiscal 2013 by 15%. Moreover, the company has maintained its consistent record of repurchasing shares, which totaled $1.2 billion in fiscal 2011, $313 million in fiscal 2012 and $1 billion in fiscal 2013.

General Mills also announced that it will report the third-quarter fiscal 2014 results on Mar 19, before the market opens. The consumer food company currently carries a Zacks Rank #3 (Hold) and given its current quarter Earnings ESP of 1.47%, we believe the third quarter could prove to be better than the second.

Management also expects General Mills' earnings to accelerate in the second half due to strong new product launches, lower input cost inflation and easing year-ago comparisons. In fact, management is expecting volumes to be better in the third quarter gaining from the inclusion of Thanksgiving holiday sales.

Other Stocks to Consider

Some better-ranked stocks in the food industry are The Hain Celestial Group, Inc. HAIN, J&J Snack Foods Corp. JJSF and Diamond Foods, Inc. DMND. All these stocks carry a Zacks Rank #2 (Buy).