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| Im more familiar with KHC than Conagra but normally when you get dividend yields that high on common equity the market is basically telling you they don't think it's sustainable. KHC is pushing it at 7.2%, but the 9% yield on Conagra I would definitely say it is unlikely they keep that payout ratio. One interesting thing about KHC is they have actually been buying a modest amount of stock back at these low prices. And their cost of debt is cheaper than the equity are buying back. So the company is actually "saving" money buying back shares (they dont have to send money out of the company to pay those dividends on retired shares). KHC has improved their balance sheet some over the years but in general it is a tough road. KHC has some ok/decent brands but if we head into a recession people will trade down from the brand. And you get weird things where the store brands like Kirkland or something at Trader Joes actually becomes preferred, not only in price but in the taste. So it is a tough road. Companies that don't grow have to be managed really damn well because it's almost impossible to keep a lid on costs. For the record I own a few KHC shares (literally like 10 or something) in a retirement account... Full disclosure. | |
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Question on a couple of stocks