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General Mills Offers Slow But Steady Growth

By: Investor's Business Daily
Posted: 11/12/2013 5:37:00 PM
Referenced Stocks: GIS

Not many companies can matchGeneral Mills ' ( GIS ) boast: It has paid a dividend without interruption or reduction for 115 years. Now, that's dependability.

It might be one of the best-known companies in the world with ubiquitous brands such as Cheerios, Wheaties, Betty Crocker, Pillsbury and Green Giant.

It all started with Cadwallader C. Washburn, who formed the Minneapolis Milling Co. in 1856 to lease power rights to mill operators. Eventually, he went into the flour business himself, and the company grew from that.

No one is going to get rich fast on the slow, steady growth General Mills delivers. But from a 2009 low of 23.18, the stock now trades just over 50.

The company currently gets more than two-thirds of its sales from the U.S., but has been aggressively growing in international markets. It now serves 100 markets worldwide.

General Mills pays an annual dividend of $1.52 a share, which translates to a 3% yield. The dividend has been growing over the past three to five years at a 12% annual rate as calculated by IBD.

It also has a five-year IBD Earnings Stability Factor of 3 on a 0 to 99 scale, where small numbers correlate to steady earnings growth. The company has enjoyed seven straight years of earnings growth. It has a five-year annualized growth rate of 8% and analysts are expecting 8% growth in both 2014 and 2015.

It has an impressive return on equity of 27% and pretax margins of 14% in 2012. Long-term debt represents 89% of equity. Earnings per share in the most recent quarter rose 6%. Sales were up 8%. Analysts are forecasting 3% EPS growth in the next report.

The stock has a Relative Price Strength Rating of 52, which means it has performed about the same as the S&P 500 over the past year. The stock is working on a saucer-like base.