General Mills, Inc. Is One Dividend Stock for the Long Haul
General Mills, Inc. (NYSE:GIS) stock may not immediately come to mind as a strong asset for a portfolio, but investment risk is going up and what’s really important going forward is quality.
It is a slow-growth world, so the income provided by a dividend-paying security like GIS stock is important (the stock’s current yield is approximately three percent).
It’s also a new business cycle in terms of interest rates and what may soon be rising price inflation. This means that investment risk for equities is on the rise and a portfolio of stocks should reflect this reality.
General Mills is not a fast-growing enterprise, but it is a quality, dividend-paying large-cap with an excellent track record of wealth creation for stockholders. Even more aggressive equity market portfolios can benefit from a few solid anchor positions that are investment-grade and owned by longer-term, institutional investors, such as General Mills stock.
Like any multinational, however, currency translation is an issue for General Mills and this will likely keep the company’s top-line sales flat to down on a comparative basis for the next few years. But combined with modest earnings growth and rising dividend payments, institutional investors have still been buying this stock because of the relative certainty these attributes provide.
The stock chart for General Mills is featured below:
Chart courtesy of www.StockCharts.com
A track record of wealth creation can’t predict the future, but it is an important feature when considering medium- to long-term investments. Dividend payments add up and if quarterly dividend income is not required, a portfolio can still benefit tremendously from automatic dividend reinvestment (at no commission cost to the investor) over time.
Dividend reinvestment is an excellent investment strategy that can help reduce overall portfolio risk and accelerate returns. More shares equals more dividends, which equals more shares and so on. Automatic dividend reinvestment is a very worthwhile strategy for non-active equity investors to consider.
This is a market that very much wants certainty and values earnings predictability. These are big contributing reasons why so many well-known, brand-name companies have done so well on the stock market, especially since the beginning of 2013.
In these markets where monetary cycles are changing, a complete and total reassessment of portfolio risk is absolutely necessary. The good news is that if global economic growth is able to accelerate and the Federal Reserve is measured with its interest rate normalization, dividend-paying blue chips will still participate in any market rallies.
The Bottom Line on General Mills, Inc.
Quality really matters as the monetary policy asset reflation slowly unwinds. And it is the case that the stock market has already gone up tremendously in anticipation of earnings growth.
With a slow-growth worldwide economic outlook, balance sheets and dividends are material considerations for equity investors. Dividend income may continue to be the only return available from the main market indices on a near-term basis.
General Mills, Inc. is representative of the kind of blue-chip holding that can serve to reduce overall portfolio risk and offer solid dividend income.
With the potential for capital gains as well, these markets denote the need for quality in a stock pick like General Mills stock.