Dividend Leader General Mills Deserves Investor Loyalty

Source: Thinkstock

Source: Thinkstock

General Mills Inc. (NYSE:GIS) is definitely a household name. Chances are, there are General Mills products in your pantry or kitchen cabinets right now. For those may know the company’s products, but who are unfamiliar with the company itself, you should know that it produces and markets branded consumer foods both in the United States and internationally.

What you may not know is that it also supplies branded and unbranded food products to the foodservice and commercial baking industries. The company’s products include ready-to-eat cereals, refrigerated yogurt, ready-to-serve soups, dry dinners, shelf stable and frozen vegetables, ice creams and frozen desserts, refrigerated and frozen dough products, dessert and baking mixes, frozen pizza and pizza snacks, grains, fruit and savory snacks, and various organic products, including granola bars, cereals, and soups. General Mills sells its products directly, as well as through broker and distribution arrangements to grocery stores, mass merchandisers, membership stores, natural food chains, commercial and noncommercial foodservice distributors and operators, restaurants, and convenience stores, as well as to drug, dollar, and discount chains. Now that we have a foundation in the company, lets turn to the stock.

General Mills stock has long been a company that you could have as a dividend leader in your portfolio. The stock is down this morning and I will discuss why momentarily. The stock is stable — that is, it trades with little volatility. The current share price is $52.10 and at this level yields 3.15 percent, a hefty dividend. The stock has also had some growth rising 30 percent in two years. Trading at a 19 price-to-earnings multiple, the stock is rather fairly valued for its earnings projections. But is the stock worth hanging onto after the company’s rough quarter? The company missed both earnings and revenues estimates. Is it time to find a new dividend leader and abandon General Mills?