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The J.M. Smucker (SJM) Rewards Investors With Dividend Hike

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The J. M. Smucker Company (SJM - Free Report) is focused on enhancing shareholders’ returns. Along these lines, the consumer food and beverage products provider announced a dividend hike. It will now pay a quarterly dividend of $1.02 per share, up 3% from the prior rate of 99 cents. The hiked dividend will be paid out on Sep 1, 2022, to shareholders of record as of Aug 12. This marks The J. M. Smucker’s 21st consecutive year of dividend growth.

The J. M. Smucker currently has a dividend payout of 45%, a dividend yield of 3% and a free cash flow yield of 5.1%. With an annual free cash flow return on investment of 5.8%, the increased dividend is likely to be sustainable.

We note that management lowered its debt load and returned cash to shareholders via dividends and share buybacks in the fourth quarter of fiscal 2022. The company’s return of capital to shareholders reflected cash dividends and share repurchases of $369.7 million in the fiscal fourth quarter and $688.5 million for fiscal 2022. The J. M. Smucker bought back two million shares for $262.7 million in the quarter. Dividend payouts are one of the biggest enticements for investors and The J. M. Smucker is committed to boosting shareholders’ value.

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What Else Should You Know?

The Zacks Rank #3 (Hold) company is progressing well with core priorities, which include driving commercial excellence, reshaping the portfolio, streamlining the cost structure and unleashing its organization to win. The company is benefiting from the revival of the Away from Home division. This was witnessed in the fourth quarter of fiscal 2022, with net sales increasing 12% to $271.2 million in the International and Away from Home segment. Excluding the impact of the natural beverage and grains businesses’ divestiture and the negative impacts of currency movements, net sales escalated 13%. The continuation of these trends is likely to be an upside, especially with things returning to normal.

The J. M. Smucker’s overall coffee portfolio looks encouraging as at-home coffee habits created during the pandemic and at-home consumption remain high. In the fiscal fourth quarter, net sales for Coffee grew 11%, backed by all brands in the company’s market-leading at-home coffee portfolio. Management stated that there is solid momentum in its Coffee business.

In fiscal 2023, the company remains focused on sustaining its solid momentum by investing in growth areas like Uncrustables and teaming up with retailers to restock Jif products after the recent recall. For fiscal 2023, the company anticipates net sales to rise 3.5-4.5% year over year. Excluding non-comparable sales related to the private label dry pet food and natural beverage and grains businesses’ divestitures, net sales are anticipated to increase nearly 6% at the midpoint of the net sales guidance. The view reflects the positive impacts of elevated net pricing to counter cost inflation in many categories.

SJM’s shares have dropped 1.6% in the past year compared with the industry’s decline of 4.4%.

Better-Ranked Food Stocks

Some better-ranked stocks are Sysco Corporation (SYY - Free Report) , Medifast (MED - Free Report) and Campbell Soup (CPB - Free Report) .

Sysco, engaged in marketing and distributing various food and related products, carries a Zacks Rank #2 (Buy). SYY has a trailing four-quarter earnings surprise of 9.1%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Sysco’s current financial year sales and earnings per share (EPS) suggests growth of 32.5% and 124.3%, respectively, from the year-ago reported number

Medifast, which manufactures and distributes weight loss, weight management, healthy living products and other consumable health and nutritional products, currently carries a Zacks Rank #2. MED has a trailing four-quarter earnings surprise of 12.9%, on average.

The Zacks Consensus Estimate for Medifast’s current financial year sales and EPS suggests growth of almost 19% and 13.4%, respectively, from the year-ago reported figure.

Campbell Soup, which manufactures and markets food and beverage products, currently carries a Zacks Rank #2. Campbell Soup has a trailing four-quarter earnings surprise of 10.8%, on average.

The Zacks Consensus Estimate for CPB’s current financial year sales suggests growth of 0.5% from the year-ago reported figure.