Yahoo Finance General Mills' (NYSE:GIS) Upcoming Dividend Will Be Larger Than Last Year's
General Mills, Inc. (NYSE:GIS) has announced that it will be increasing its periodic dividend on the 1st of August to $0.60, which will be 1.7% higher than last year's comparable payment amount of $0.59. This makes the dividend yield 3.7%, which is above the industry average.
Check out our latest analysis for General Mills
General Mills' Earnings Easily Cover The Distributions
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Based on the last payment, General Mills was quite comfortably earning enough to cover the dividend. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.
The next year is set to see EPS grow by 17.7%. If the dividend continues on this path, the payout ratio could be 47% by next year, which we think can be pretty sustainable going forward.
General Mills Has A Solid Track Record
Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was $1.52 in 2014, and the most recent fiscal year payment was $2.36. This works out to be a compound annual growth rate (CAGR) of approximately 4.5% a year over that time. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.
General Mills Could Grow Its Dividend
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. General Mills has impressed us by growing EPS at 8.9% per year over the past five years. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.
General Mills Looks Like A Great Dividend Stock
Overall, a dividend increase is always good, and we think that General Mills is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 1 warning sign for General Mills that investors should take into consideration. Is General Mills not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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