They're After My Lucky Dividends: How to Earn $500 A Month from General Mills Stock

Zinger Key Points
  • General Mills Inc (NYSE: GIS), the cereal giant behind brands like Cheerios and Lucky Charms, reports a dip in revenue this fiscal year.
  • General Mills currently has a dividend yield of 3.08%.

Jerome Powell’s Federal Reserve increasing the interest rates isn’t just affecting the markets — they’re reaching into our cereal bowls as well.

What Happened: General Mills Inc GIS, the cereal giant behind brands like Cheerios and Lucky Charms, reported a dip in revenue this fiscal year, citing higher carrying costs of inventory and larger customers managing their balance sheets as key factors in their reduced performance.

Fiscal fourth quarter volumes dropped by 8% and 2% in the North America Retail and Pet divisions respectively, with full fiscal-year volumes declining by 6% and 2% in the same.

Inflation, coupled with decreasing volumes, caused General Mills’ gross profit margins to suffer. Reported gross profit margins in the fiscal fourth quarter dropped 1.8% year-over-year to 34.4%. For the fiscal year, gross profit margins fell 1.1% from a year ago to 32.6%.

Despite the dip, General Mills reported fourth-quarter fiscal 2023 sales growth of 3% year-on-year, clocking $5.03 billion, though the figure missed the Street consensus of $5.17 billion.

While the figures might cause investors to hesitate, there is potential for gains in the form of dividends.

General Mills currently has a dividend yield of 3.08% — let's do some math.

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For an investor looking to earn $500 per month (or $6,000 annually) from shares of General Mills, they’d need to invest about $194,805.19, which translates to 2,539 shares.

If the aim was to generate a more modest amount of $100 a month, or $1,200 annually, the investment needed would be about $28,961, or 508 shares.

Here's how we calculate it: $6,000 / 0.0308 = $194,805.19 ($500 per month, $6,000 annually); $1,200 / 0.0308 = $28,961 ($100 per month, $1,200 annually).

Note that dividend yield can change on a rolling basis, as the dividend payment and the stock price both fluctuate over time.

The dividend yield is calculated by dividing the annual dividend payment by the current stock price. As the stock price changes, the dividend yield will also change.

For example, if a stock pays an annual dividend of $2 and its price is $50, its dividend yield would be 4%. If the stock price increases to $60, the dividend yield would decrease to 3.33% ($2/$60).

Conversely, if the stock price decreases to $40, the dividend yield would increase to 5% ($2/$40).

Further, the dividend payment itself can also change over time, which can also impact the dividend yield. If a company increases its dividend payment, the dividend yield will increase even if the stock price remains the same. Similarly, if a company decreases its dividend payment, the dividend yield will decrease.

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Photo: Shutterstock

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Posted In: EarningsLarge CapLong IdeasNewsDividendsFederal ReserveMarketsTrading IdeasGeneralCerealfoodInflationInterest Rates
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