Packaged foods makerConAgra Foods ( CAG ) has increased its dividend for three straight years, and its shares touched a new 52-week high Thursday following a strong quarterly earnings report.
ConAgra gapped up as much as 4% intraday to a high of 31.12 after the company said fiscal second-quarter profit rose 16% from a year ago, beating expectations. Revenue climbed 9%, picking up for the second straight quarter. The company also raised its full-year outlook.
The stock later staged a negative reversal Thursday, giving up most of the day's gains. It's now 4% above a 28.90 flat-base buy point.
The maker of foods under labels such as Marie Callender's, Chef Boyardee and Slim Jim cited moderating raw materials costs, cost-containment efforts and acquisitions as reasons for its strong performance.
ConAgra is up about 14% year-to-date, about in line with the S&P 500's increase.
Omaha, Neb.-based ConAgra announced in September that it was boosting its quarterly dividend by a penny to 25 cents a share, citing its strong cash flow and earnings outlook. The annual dividend yield is currently 3.3%, well above the S&P 500 average of 2.1%.
The company has steadily increased its quarterly dividend from 19 cents a share in 2009.
ConAgra said Thursday its $5 billion acquisition of Ralcorp is on track to close early in 2013. The company has acquired several companies recently, the latest being the Home Menu frozen meals businesses fromUnilever ( UL ).
But Fitch downgraded ConAgra's long-term debt rating after it announced the Ralcorp deal in late November, saying it would "substantially" increase the company's debt burden.
Still, ConAgra's debt-to-equity ratio is a manageable 64%, and cash flow per share has increased for four straight years, to $2.80, amid productivity improvements.
ConAgra on Thursday raised its full-year profit forecast to at least $2.06 per share, up from its earlier estimate of $2.03-$2.06 but below analyst expectations for $2.07.