ConAgra Foods Lifts Profit Outlook, Pays Big Dividend

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Hungry for growth and income?

ConAgra Foods ( CAG ), which makes products such as Dennison's Chili and Wesson vegetable oil, offers both.

The company has posted rising earnings in the past four years. From fiscal 2008 to fiscal 2012, profit jumped 72%.

The Omaha, Neb.-based packaged foods giant has been on a shopping spree in recent years, buying up individual companies and brands.

In late January, the company wrapped up its buyout of Ralcorp, the largest private-label food producer in the U.S. ConAgra announced the Ralcorp deal, valued at $6.8 billion including debt, in November.

Last week ConAgra lifted its profit outlook for its fiscal 2013, which ends in May, to about $2.15 a share from a prior outlook of at least $2.06 a share given in December. This would represent growth of about 17% from 2012's EPS result.

The Ralcorp buyout is expected to add a nickel a share to fiscal 2013 EPS. For fiscal 2014, the Ralcorp deal is slated to tack on about 25 cents a share to earnings.

ConAgra has paid shareholder dividends since the late 1970s and has slowly raised its cash payouts in recent years. The company last bumped up its payout in September, raising the dividend by a penny to 25 cents a share.

On an annual basis, ConAgra pays $1 a share. That offers a yield of about 2.9%, which is one of the highest among the 19 dividend-paying stocks in IBD's Food-Packaged industry group.

Even though most major market indexes fell last week, the packaged food group jumped 1.5%. The recent buyout ofH.J. Heinz ( HNZ ) has boosted food stocks, which are generally seen as defensive plays.



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



This article appears in: Personal Finance , Investing Ideas

Referenced Stocks: CAG , HNZ

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