It was a difficult task trying to find an undervalued stock for the month of August. I had some other stocks on my watch list I thought about buying but those seemed a bit overpriced (CLX for example). I don't believe GIS is undervalued at this price by any means but I don't think I will look back and regret this trade in 20 years. I have given up on trying to time the market.
GIS Basic Statistics
- Ticker Symbol: GIS
- PE Ratio: 17.54
- Yield: 3.1%
- Dividend Growth 10yr: 8.7%
- Payout Ratio: 47%
- Market cap: $31.46 B
- Website: www.generalmills.com
GIS VS S&P 500
The annual dividend payment has increased by 8.70% per year over the past decade, which is slightly higher than the growth in EPS. A 9% growth in distributions translates into the dividend payment doubling almost every eight years on average. If we look at historical data, going as far back as 1986, one would notice that the company has managed to double distributions every eight and a half years on average. GIS recently approved a 15% increase in the dividend rate effective with the August 1, 2013 payment. The increase will bring the payments up from $.33 to $.38 per share.
Howdy Cap'n
ReplyDeleteCame by your site via Dividend Mantra. Snooped around and I a really like it, easy on the eyes, cool graphics, lots of info. Thanks for the Dividend Champions list too, how often is it updated?
Bookmark added.
Hey thanks for the compliments and thanks to DM for the shout out as well. I try and update the dividend champions list each month. Thanks for dropping by!
DeleteNice pickup of GIS. Considering their business is providing foods that are found in almost every household they have a big advantage in at least providing inflation matching dividend growth just through price increases. Although I expect much better than that from here.
ReplyDeleteThat was part of my thinking when I made my first purchase. With the product line that GIS offers it's seen steady growth even through the recent recessions. People still want to eat their cheerios. :-o
DeleteIt is an impressive growth compared to S&P and also very impressive dividend growth, it's acceleration. Hopefully it is sustainable growth. But since it grew this way for about 12 years, this may be a great purchase. I also have a hard time finding good candidates and based on today's market it may be even harder, since the stocks continue rushing back up.
ReplyDeleteHey Martin, I know the feeling. It's been a difficult time trying to find undervalued stocks with the markets going like gangbusters in the first half this year. There's always a few names out there though that are comparably cheap just gotta find em.
DeleteGIS is great company and makes a nice holding as a dividend growth stock too. In fact I need to buy some more shares sometime. I may wait for a little dip on this one, but many times that strategy backfires. I think $49 and 3.1% yield is fairly reasonable for General Mills. Nice buy!
ReplyDeleteThanks CI, I'm really happy with GIS as a long term hold in my portfolio. I'd love to have gotten this on a dip too! I wish the markets would have obliged me with a pullback but it never came. I try each month to select an undervalued stock to purchase but the stocks I had my eyes on were all really high so I pulled the trigger GIS who had at least come off of it's highs.
DeleteGreat purchase. I've been looking at GIS for a while now and have put aside some cash to take advantage of a dip (although I agree, timing the market is a fools errand). As you pointed out, I do not believe it is undervalued but I would still like a little more margin for error before adding it to the portfolio. Great blog, keep it up.
ReplyDeletealso, I just started a dividend investing, etc. blog @ www.BidAskDividends.com. Please let me know if you have any comments, suggestions.
DeleteHey Robert, glad you could stop by. It sure would be nice to grab some shares on the cheap like we could have done back in 2009 when the market crashed. That was probably the biggest drop in GIS history but it wasn't even that bad considering how bad the rest of the market was reeling. It seems that even when times are tough people still buy Cheerios, Pizza Rolls and Hamburger Helper.
DeleteThat's great you started a blog, I'll check it out for sure. Best of luck!
CD
I agree, the best companies are the ones that still produce items that are bought regardless of economic conditions. Cereal is definitely one of these. If you want a quick case study, look at Coke in Quincy, FL. A banker realized that no matter how bad the economy was, people were drinking Coke. He convinced a lot of people to hoard coke shares and never sell...many of these families are now extremely wealthy and living off the coke dividends alone.
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