The board of directors of
Kraft Foods Group, Inc.
) recently announced a 5% increase in the consumer food company's
dividend; its first dividend hike after becoming an independent
Kraft Foods Group was spun off from
Mondelez International, Inc.
) into a separate company on Oct 1, 2012, and now consists of the
North American grocery business of the old Kraft Foods.
The quarterly dividend was increased from 50 cents to 52.5
cents per common share, equivalent to an annual dividend of $2.14
per share. The new dividend will yield almost 4.0% annually. The
increased quarterly dividend will be payable on Oct. 25, 2013 to
shareholders of record as of Oct. 11, 2013.
In the past, Kraft concentrated largely on improving revenues
and margins, which led to inconsistent cash returns to
shareholders. However, the new Kraft aims to balance growth and
reinvestments, going ahead. Kraft focuses on cash generation and
delivering consistent shareholder returns through strong
financial discipline. The company aims to generate significant
cash and is targeting to "put dollars in shareholders' pockets,
not margins". Free cash flow is expected to be at least 85% of
the net income in the long term which will be used mainly to pay
steady and incremental dividends targeted to grow consistently in
the mid single-digit range. The latest dividend increase rate of
5% was in line with management's expectations of a mid
Other Stocks to Consider
Kraft carries a Zacks Rank #3 (Hold). Other stocks in the food
industry that are currently performing well and have a bright
Pinnacle Foods Inc.
Green Mountain Coffee Roasters, Inc
). Both the companies carry a Zacks Rank #1 (Strong Buy).
GREEN MTN COFFE (GMCR): Free Stock Analysis
KRAFT FOODS GRP (KRFT): Free Stock Analysis
MONDELEZ INTL (MDLZ): Free Stock Analysis
PINNACLE FOODS (PF): Free Stock Analysis
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