The Kraft Heinz Company (NASDAQ:KHC): Ex-Dividend Is In 4 Days
Shares of The Kraft Heinz Company (NASDAQ:KHC) will begin trading ex-dividend in 4 days. To qualify for the dividend check of US$0.63 per share, investors must have owned the shares prior to 15 November 2018, which is the last day the company’s management will finalize their list of shareholders to which they will send dividend payments. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Kraft Heinz’s latest financial data to analyse its dividend characteristics.
View our latest analysis for Kraft Heinz
5 checks you should do on a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
Is it paying an annual yield above 75% of dividend payers?
Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
Has dividend per share risen in the past couple of years?
Does earnings amply cover its dividend payments?
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How does Kraft Heinz fare?
The current trailing twelve-month payout ratio for the stock is 29%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect KHC’s payout to increase to 69% of its earnings, which leads to a dividend yield of around 4.9%. However, EPS is forecasted to fall to $3.61 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. The reality is that it is too early to consider Kraft Heinz as a dividend investment. It has only been consistently paying dividends for 3 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
In terms of its peers, Kraft Heinz produces a yield of 4.7%, which is high for Food stocks.
Next Steps:
Taking into account the dividend metrics, Kraft Heinz ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I’ve compiled three essential aspects you should further research:
Future Outlook: What are well-informed industry analysts predicting for KHC’s future growth? Take a look at our free research report of analyst consensus for KHC’s outlook.
Valuation: What is KHC worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether KHC is currently mispriced by the market.
Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
