Tuesday, June 26, 2012

General Mills Increases Dividend

Great news for General Mills (GIS) shareholders.  GIS raised its dividend 8.20% to $.33 per quarter.  This is the 9th consecutive year GIS has boosted it dividend.  The company (including predecessors)has a long history of rewarding shareholders, it has paid dividends for 113 years without reduction.  Holy crap that's a long time.  Wow! 

While being known for popular cereal brands, they also manufacture and market other recognizable foods such as Yoplait, Green Giant, Pillsbury, and Old El Paso.  I consume and enjoy many of their products.  Sometimes I worry that store brands might cut into their profits.  A few weeks ago I bought a box of off brand Cheerios to check out the competition.  It tasted like cardboard, no comparison.  I'd have to be in a dire financial situation to buy immitation Cheerios again.  I believe branded foods will continue to be a good investment.


  1. As a fellow GIS shareholder, I am also happy with this dividend increase. Like you, I also consume many of their products, such as Cheerios and Green Giant items.

    1. Cheerios was my staple for breakfast. Now that I don't have a car to drive I eat at the dining facility on post. My eating habits changed a bit. I still enjoy cheerios when they are available. Infact I had honey nut cheerios this morning. They come in single serve containers or through a dispenser.

  2. Once upon a time, I owned GIS in a virtual stock game. When it split 2:1, the game did not know what to do and I thought I lost half my money and quit the game. Ever since then, I have been oddly averse to researching GIS and considering it for my portfolio.

    I was looking into CAG the other day and agree that branded foods will continue to be a good investment, though I disagree that off-brand is that bad and can't cut into profits. And what about private brands, most notably of the organic variety?

    But isn't the real question whether the GIS (or CAG) brands are innovating and growing market share? In the case of CAG, I recently read commentary that their stable of brands has weak brand value - Banquet, Chef Boyardee, Egg Beaters, Hunt's, Hebrew National, Orville Redenbacher - and I can't help but be confused. (I must remember not to believe everything I read, though.) If you want to talk grocery products, I would think CLX and CL would have a weaker stable of brands based on what I see. Though I can appreciate the major difference between a weaker stable of brands versus weaker brand value, I'm not sure I see how CAG has weaker brand value with those names than a CLX or CL.

    Sorry for the rant...just curious what people's thoughts are on the consumer goods sector.

  3. D M,

    I absolutely think off brands can cut into profits, it's why I wanted to see what the competition was doing. Personally I thought off brand cheerios were horrible, but somebody has to be buying them or they would discontinue the product. I only tried one kind, there are a lot of off brands. Maybe some of them taste good? I don't know.

    I looked at CAG before and was not impressed with their brands. I never heard of half of them. In fact some of the brands like Banquet I don't like. I own shares in Heinz which makes Smart Ones frozen dinners, those are good in my opinion. I also prefer Heinz ketchup. I do like David sunflower seeds from ConAgra.

    As for General Mills, I see innovation. Yoplait greek yogurt is awesome and healthy. Old El Paso has a new taco shell boat that my mom bought. We both enjoyed it, she said she would buy it again. Look at all the flavors of Cheerios. GIS comes out with new products often.

  4. General Mills continues to innovate and strengthen its brands. The new Peanut Butter Cheerios have been a big hit. A few months ago I bought the new Dulce de Leche Cheerios on a whim and discovered that I really like them. In the cereal category, GIS has been gaining market share for 5 years in a row.

    As CI mentioned, they also have Yoplait Greek yogurt that is doing well, and they'll soon be coming out with Yoplait Greek 100 yogurt (100 calories) endorsed by Weight Watchers. The Fiber One and Nature Valley snack bars have also been very successful and I think new varieties are on the way. The company has also been making sensible acquisitions in the snack area (Food Should Taste Good, Yoki Alimentos). Overall, I like the trajectory that GIS is on.

    The stock sold off today on the mixed quarterly report and weak outlook, although I think the results were partly due to high commodity costs over the past year. Those costs have started to ease, so things should improve going forward.