Good Outlook for GIS Stock
As odd as it seems, you can probably do better over the next several years with General Mills, Inc. (NYSE:GIS) stock over many other hyped-up names in this market. It’s one of my favorite dividend stocks right now.
The Minneapolis-based cereal and branded food manufacturer is not the fastest growing large-cap in the equity market universe, yet it’s proven to be very good at making money for shareholders of General Mills stock.
Combined with a strong dividend, GIS stock is an excellent candidate for investment-grade portfolios that’s worthy of a closer look.
Consistency of returns is not an unimportant trait, especially in a slow-growth world. The one thing that’s going up these days is investment risk. Therefore, a steady grower—and dividend payer—makes for a welcome addition to an equity portfolio in the current investing climate.
General Mills is much more than “Cheerios,” “Wheaties,” and “Lucky Charms;” it’s also “Häagen-Dazs,” “Yoplait,” “Green Giant,” “Bugles,” “Nature Valley,” “Annie’s,” “Betty Crocker,” “ Old El Paso,” “Pillsbury,” and “Cascadian Farm,” to name just a few of its other brands.
And what’s most important with these well-known brands is that they make good money, even if sales are currently in decline.
The chart for GIS stock is featured below:
Chart courtesy of www.StockCharts.com
Like a lot of multinationals these days, currency translation provides a top-line headwind. But, combined with strong dividends, earnings-per-share (EPS) growth is enough for institutional investors to bid in this market.
General Mills’ EPS in its second fiscal quarter of 2016 (ended November 29, 2015) grew to $0.87, up from $0.56 for a 55% gain comparable gain.
The company bumped its quarterly dividend higher by about seven percent comparatively to $0.44 per share.
General Mills’ track record of paying out rising dividends to stockholders is outstanding. It’s been uninterrupted and not reduced for 117 years, according to the company.
And because of the stability inherent in the consumer food goods business, General Mills actually is the perfect example of a solid candidate for long-term portfolio ownership and automatic dividend reinvestment, which is a proven wealth-creating strategy.
The Bottom Line on GIS Stock
GIS stock, which does boast an excellent track record even without all those dividends, is due for another share split. The last one was a two-for-one stock split in June of 2010.
In this equity market universe and slow-growth world, existing winners are what institutional investors continue to bid. They have the money to invest; all that’s required is relative certainty and they will keep putting dollars into these proven winners.
General Mills is one of this market’s existing winners and it’s the kind of portfolio holding that helps reduce risk in what’s been a massive, monetary-induced equity market reflation.
Investment risk is now more important than potential returns with equities. The market has already gone up, economic growth is slow, and we are in a new, rising interest rate cycle.
General Mills isn’t going to make a lot of headlines—but it doesn’t need to. General Mills stock’s track record of wealth creation speaks for itself.