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Founded in 1856, General Mills (GIS) is a leading global manufacturer and marketer of branded consumer foods, such as ready-to-eat breakfast refrigerated dough and other baking items, snack foods, ice cream, and yogurt, notes Vita Nelson, editor of DirectInvesting.
Its portfolio of well-known brands includes Cheerios, Betty Crocker, Pillsbury, Haagen-Dazs, and Yoplait. Sales outside the U.S. account for just less than one-fourth of total sales.
Its long history of consistent revenues and earnings growth makes it a solid company. It is considered a diversified business with durable competitive advantage over rivals. The company also enjoys a solid management and corporate culture.
Consensus estimates call for the company to earn about $3.11 per share this year, up from $2.82 per share last year, and to go to about $3.24 per share next year.
General Mills has paid dividends to investors since 1898 and has increased its payments for 13 consecutive years. During the past five years, it has increased its dividends at an average rate of 9.5%, with its quarterly payment of $0.49 currently providing a yield of 3.59%.
The stock exhibits a Dividend Payout Ratio of 69%, which means the company is paying out 69% of all its net income in dividends and is retaining a percentage of earnings to reinvest or grow the business.
Its average DPR during the past five years is 67%.
Technically, GIS also looks attractive, trading 27.0% below its all-time high, 9.2% below its 200-day moving average line and 3.7% below its 50-day moving average line, while it is forming a long base between $73 and $53 approximately, in which $53 is acting as a technical support level.
GIS’s Beta (a measure of the volatility, or systematic risk in comparison to the market as a whole) is 0.52 compared to the S&P 500, so the stock is 48% less volatile than the market.
A hypothetical investment in General Mills has grown cumulatively (including dividends reinvested) 9,222.89% during the past forty years. However, if you remove dividend reinvestment from the equation, the same hypothetical investment would have grown only 2,802.88% during the same period of time.
GIS’s dividend reinvestment plan charges no fees for cash investing, dividend reinvestment, automatic investment or termination of the plan.
With the stock being fundamental and technically attractive, this company is an appropriate holding for investors who have a long-term investment horizon.
Vita Nelson is founding publisher and editor of Moneypaper.
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