Dissecting Conagra Brands Inc's Dividend Performance and Prospects
Conagra Brands Inc (CAG, Financial) recently announced a dividend of $0.35 per share, payable on 2024-02-29, with the ex-dividend date set for 2024-01-29. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Conagra Brands Inc's dividend performance and assess its sustainability.
What Does Conagra Brands Inc Do?
Conagra Brands is a packaged food company that operates predominantly in the United States (over 90% of revenue and profits). Most of its revenue comes from frozen food, including brands like Marie Callender's, Healthy Choice, Banquet, and Birds Eye. Conagra also sells snacks, shelf-stable staples, and refrigerated food through brands like Duncan Hines, Hunt's, Slim Jim, Vlasic, Orville Redenbacher's, Reddi-wip, Wish-Bone, and Chef Boyardee. The company primarily sells through the U.S. retail channel, with just 8% of fiscal 2023 revenue coming from international markets and 9% from foodservice.
A Glimpse at Conagra Brands Inc's Dividend History
Conagra Brands Inc has maintained a consistent dividend payment record since 1986, distributing dividends on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Conagra Brands Inc's Dividend Yield and Growth
As of today, Conagra Brands Inc currently has a 12-month trailing dividend yield of 4.59% and a 12-month forward dividend yield of 4.73%, suggesting an expectation of increased dividend payments over the next 12 months. Over the past three years, Conagra Brands Inc's annual dividend growth rate was 15.80%, which decreased to 10.70% per year over a five-year horizon. Over the past decade, the annual dividends per share growth rate stands at 1.90%.
Based on Conagra Brands Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Conagra Brands Inc stock as of today is approximately 7.63%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. As of 2023-11-30, Conagra Brands Inc's dividend payout ratio is 0.66, indicating a balance between retaining earnings for growth and rewarding shareholders. Conagra Brands Inc's profitability rank is 7 out of 10 as of 2023-11-30, suggesting good profitability prospects. The company has reported net profit in 8 out of the past 10 years.
Growth Metrics: The Future Outlook
Conagra Brands Inc's growth rank of 7 out of 10 suggests a good growth trajectory relative to competitors. The company's revenue per share and 3-year revenue growth rate of approximately 4.10% per year, however, underperforms against about 59.64% of global competitors. The 3-year EPS growth rate shows a decline of -6.20% per year on average, underperforming against 66.29% of global competitors. Additionally, the 5-year EBITDA growth rate of -1.70% also underperforms against about 67.04% of global competitors.
Next Steps
In conclusion, Conagra Brands Inc presents a mixed picture for dividend investors. While the company has a history of consistent dividend payments and a reasonable payout ratio, its growth metrics and recent earnings performance raise questions about long-term sustainability. However, the company's good profitability rank and yield on cost provide some reassurance. Investors should weigh these factors against their investment goals and the potential for Conagra Brands Inc to navigate its challenges and capitalize on opportunities. For those seeking high-dividend yield stocks, GuruFocus Premium users can utilize the High Dividend Yield Screener for further research.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
