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Kraft Foods to Break up Grocery, Snack Foods Units; Q2 Earnings Beat View (KFT)

Packaged foods maker Kraft Foods Inc. ( KFT ) on Thursday posted better-than-expected second quarter earnings and announced it would break its company into two publicly-traded companies.

The Northfield, IL-based company reported second quarter net income of $976 million, or 55 cents per share, compared with $937 million, or 53 cents per share, in the year-ago period. Excluding items, adjusted operating earnings were 62 cents per share.

Revenue rose 13% from last year to $13.88 billion.

On average, Wall Street analysts expected a smaller profit of 58 cents per share, on lower revenue of $13.15 billion.

The company also boosted its full-year earnings outlook due to higher expectations of strong organic growth.

In even bigger news, Kraft said its Board of Directors has approved a move to split the company into two independent publicly-traded entities. The move would spin-off its North American grocery business from its global snack foods business. KFT noted the split would allow the two units to concentrate fully on their own markets and business opportunities.

Kraft Foods shares rose $1.94, or +5.7%, in premarket trading Thursday.

The Bottom Line

We have been recommending shares of Kraft Foods ( KFT ) since Mar.5, 2009, when the stock was trading at $24.26. The company has a 3.38% dividend yield, based on last night's closing stock price of $34.30.

Kraft Foods Inc. ( KFT ) is a "Recommended" dividend stock, holding a Dividend.com DARS™ Rating of 3.6 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .

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

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

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