If an investor has to choose between General Mills, Inc. (GIS) and the Kellogg Company (K) on the basis of whichever of the two pays sustained and incremental dividends, Bidness Etc recommends General Mills. Here are our reasons.
General Mills has a long history of returning value to shareholders, having paid out dividends for the past 115 years at stable or incremental rates. Even though Kellogg also has a long history of paying out dividends (it has done so for the past 89 years), the company has reduced dividend payments at various times in its history.
Kellogg increased its quarterly dividends by 4.6% this year to $0.46, while General Mills increased its payout by a much larger 15.2% to $0.38. Similarly, over the last three years, General Mills’ dividends grew, on average, nearly 11% every year – in contrast, Kellogg’s investors received only 5% more in dividends every year over the same period.
And although both companies currently have the same 12-month dividend yield (2.8%), we expect stable and higher dividends in the future from General Mills, given its healthy cash flows from operations, lower debt-to-equity ratio, and ability to cover dividend payments with existing reserves.
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