Consumer buying habits are shifting as inflation rises, particularly due to high energy prices, prompting tighter budgets among consumers. This challenging environment has negatively impacted food manufacturers Conagra (CAG) and General Mills (GIS), with both stocks seeing significant declines. Their high dividend yields—9.9% for Conagra and 7.2% for General Mills—reflect this market pressure, but a closer look reveals differing financial health between the two.
General Mills appears to have a stronger financial foundation, with a lower payout ratio of around 60% compared to Conagra’s negative ratio due to recent one-time charges. Despite both companies having cash payout ratios near 80%, General Mills has a more reliable dividend history, having paid uninterrupted dividends for 127 years. In contrast, Conagra’s past dividend cut raises concerns about its stability during downturns.
For dividend-focused investors, General Mills presents a more attractive option. Its robust business model and dividend safety suggest that its 7.2% yield is a safer bet in the current market landscape.
Source: fool.com