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Kellogg Company (K - Analyst Report) recently announced its plans to increase dividend by 4.5%. The quarterly dividend is proposed to be increased from 44 cents to 46 cents per common share, equivalent to an annual dividend of $1.84 per share. The increased quarterly dividend will, however, be payable from the third quarter of 2013.

In addition, the company has announced its board of directors’ decision to pay a dividend of 44 cents on Jun 17 to shareholders on record as of Jun 3.

The food giant is set to report its first-quarter fiscal 2013 results on May 2 before the market opens. During the first quarter, sales growth is expected to be solid.

We believe the improving volume trends in North America and the strong performance of its Pringles business will once again drive the top line in the quarter. Kellogg acquired The Procter & Gamble Company’s (PG - Analyst Report) snack unit in Jun 2012, which included the Pringles brand, for $2.7 billion. Pringles is now the second-largest brand at Kellogg.

However, the company expects adjusted operating profit to decline slightly year-over-year due to higher costs of input and other cost increases. Earnings per share are also expected to be down in the first quarter due to difficult year-ago comparisons (which included a benefit of 5 cents from interest rate hedges) and headwinds from the Venezuela currency devaluation.

Kellogg carries a Zacks Rank #2 (Buy). The company’s solid brand positioning, its geographic diversity and significant investments behind innovation, marketing and supply-chain initiatives are encouraging. Moreover, we are encouraged by the growth potential, diversification and international presence that the Pringles deal provides. However, the strained cereal business, pressures in Europe and rising input costs create headwinds.

Some other food companies you may want to consider include Flower Foods Inc. (FLO - Snapshot Report), with a Zacks Rank #1 (Strong Buy) and J&J Snack Foods Corp. (JJSF - Snapshot Report) with a Zacks Rank #2 (Buy).

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