B&G Foods Has Almost Doubled Its Dividend Since 2010


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A company that grows through acquisitions can step up growth fast.

This has been the strategy atB&G Foods ( BGS ). It's an approach that works especially well in an environment of low interest rates.

Just recently CEO David Wenner pointed out that the company issued $700 million of senior notes at 4.625%, which allowed B&G to retire its 7.625% senior notes.

Interest rates are rising, though, and many market watchers see that as a trend. Will that affect B&G?

At the July 18 earnings call, Wenner said: "You have to be a little more cautious here as interest rates start inching up."

A second factor works in B&G's favor on the acquisition front. B&G is small enough that acquiring a niche player can help B&G's top and bottom lines.

The big players in the packaged food group -- companies like Unilever ( UL ) andGeneral Mills ( GIS ) -- generally don't compete for the small targets. In fact, sometimes the businesses B&G acquires are orphan brands within the big companies.

Competition typically comes from private equity firms.

At a Boston conference in 2012, Wenner said, "We are very, very good at executing on acquisitions." It's not bragging if you can do it. B&G typically likes to grab companies or brands in a sales decline and then turn them around "to generate modest organic growth."

B&G's brands include Cream of Wheat, Ortega and Static Guard.

Earnings increased 48%, 21% and 24% on revenue gains of 2%, 6% and 17% in the past three years. The Street expects 13% EPS growth on sales growth of 14% this year.

The quarterly dividend has nearly doubled since 2010. The annualized yield is 3.7%.

The stock has formed a flat base with a 36.59 buy point.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing Investing Ideas
Referenced Stocks: BGS , GIS , UL

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