With all the talk of the fiscal cliff and elevated market
volatility, perhaps it is surprising that some allegedly low-beta
sectors, like telecommunications and utilities, have struggled as
of late. To the group's credit, consumer staples have held up
nicely. Quiet as it has been kept, one familiar staples stock has
started to shine in recent weeks.
Sleepy though not small, General Mills (NYSE:
) is up nearly 2.4 percent in the past month. The gains for the
shares are made all the impressive when considering this is a
dividend stock, meaning it could have been vulnerable in an
environment dominated by fears of increased dividend taxes.
As the company points out
on its Web site
, it has paid dividends uninterrupted for 113 consecutive years.
The dividend has been increased every year dating back to 1996.
The annual dividend was 78.5 cents per share in 2008. Assuming no
increases -- an unlikely proposition -- General Mills will pay
$1.32 per share in dividends in 2013.
Vulnerable to the fiscal cliff? Not General Mills. At least
not yet. Investors can pull up a chart and see the stock is
trading just pennies away from its 52-week high just over $41.
Actually, do some more digging to discover something else few are
talking about: That is not just a 52-week high. That is an
all-time high for the second-largest U.S. food company.
Beyond a decent yield of 3.2 percent and dependable dividend
increases, conservative investors likely love the low-beta ways
of General Mills. The stock's beta against the S&P 500 is
0.17. Coca-Cola's (NYSE:
) beta is triple that. Procter & Gamble's (NYSE:
) is close to triple that of General Mills, yet General Mills has
easily outperformed those two Dow components in the past
Or investors can just ponder this: Thirty-year U.S. Treasuries
yield on 2.9 percent with little chance for capital appreciation.
Why not grab another 30 basis points of yield with General Mills?
Assuming five percent annual dividend growth over the next three
decades for General Mills, investors land a
yield on cost of 14.3 percent
Even the pros like the low-beta posture afforded by General
Mills. In the most recent round of 13F filings from hedge funds,
according to Food Business News
Overall, sales trends for 2013 look positive. The company said
recent sales of its Greek yogurts have been "encouraging" and
results within the natural and organic foods businesses have also
been positive, Food Business reported. Should those trends
continue working in the company's favor, particularly yogurt, new
all-time highs for the shares will be easily reached throughout
(c) 2012 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.