The General Mills (NYSE: GIS) dividend history paints a clear picture. The company has a long history of adapting and paying shareholders more. Investors have beaten down the share price, but the dividend yield is now mouthwatering. Let’s look at the recent trends.
Business Overview and Highlights
General Mills is a $26 billion business that runs out of Minneapolis, Minnesota. The business employs 40,000 people and pulled in $16 billion in sales last year. That breaks down to $394,000 per employee.
The company runs within the consumer sector and maintains a solid credit rating of BBB. This allows General Mills to issue cheap debt to expand operations and finance other initiatives.
Earlier this year, General Mills announced the acquisition of Blue Buffalo for $8 billion. It’s one of the fastest-growing pet food companies. This will help General Mills expand its product offerings and continue to pay dividends through thick and thin.
General Mills Dividend History Over 10 Years
The company paid investors $0.43 per share a decade ago. Over the last 10 years, the dividend has climbed to $1.96. That’s a 356% increase! You can see the annual changes below.
The compound annual growth is 16.4% over 10 years… but over the last year, the dividend climbed 2.1%. The slowdown in dividend growth isn’t a great sign. However, General Mills still might be a great income investment. Let’s review General Mills’s dividend yield history.
Current Yield vs. 10-Year Average
General Mills’s long history of paying dividends makes it one of the best dividend stocks around. This also makes the dividend yield a great indicator of value. A higher yield is generally better for buyers. Sustainability is also vital, and we’ll dig into that soon.
The dividend yield comes in at 4.45%, which is above the 10-year average of 3.78%. The chart below shows the dividend yield over the last 10 years.
The higher yield shows that investors have bid down the company’s market value. They might be expecting higher growth and payouts. But more often than not, the dividend yield is mean-reverting with share price changes.
Improved Dividend Safety Check
Investors use payout ratio to determine dividend safety. To do this, they look at the dividend per share divided by the net income per share. So a payout ratio of 60% would mean that for every $1 General Mills earns, it pays investors $0.60.
Payout ratio is an indicator of dividend safety… but accountants manipulate net income. They adjust for goodwill and other non-cash items. A better metric is free cash flow.
Here’s the General Mills payout ratio based on free cash flow over the last 10 years.
The ratio is volatile over the last 10 years, and the trend is up. The last reported year shows a payout ratio of 51%. This gives wiggle room for the General Mills board of directors to raise the dividend.
Closing Thoughts: General Mills Dividend History
Investors have beaten down General Mills and pushed the dividend yield well above its average. General Mills’s dividend history is long, and the business has overcome every downturn. New investors can buy in and collect a thick dividend yield while they wait for a turnaround.
To uncover more dividend stocks, check out some of our top dividend investing research.
Good investing,
Rob
