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Flowers Foods (FLO) Rewards Investors With Dividend Hike

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Flowers Foods, Inc. (FLO - Free Report) announced a dividend increase, showcasing the company's commitment to boosting shareholders’ value. The board of directors declared a quarterly dividend of 24 cents per share, a hike of 4.3% from the prior quarter’s dividend rate. The hiked dividend will be paid on Jun 20, 2024, to shareholders of record as of Jun 6. This marks the company’s 87th consecutive quarterly dividend. The move raises Flowers Foods’ annual dividend rate to 96 cents per share, up from 92 cents paid during the prior year.

The dividend hike showcases confidence in Flowers Foods’ capacity to achieve earnings growth in line with the long-term financial objectives. Dividends form a crucial component of the commitment to allocating capital to maximize shareholder returns. The company’s robust balance sheet and consistent cash flow generation offer a competitive edge, facilitating investments in future growth opportunities alongside rising dividends.

Flowers Foods currently has a dividend payout of 77%, a dividend yield of 3.9% and a free cash flow yield of 5.4%. With an annual free cash flow return on investment of 9.6%, the increased dividend is likely to be sustainable. The company’s dividends paid to shareholders increased $6.7 million to $146.7 million during first-quarter fiscal 2024.

Well, dividend payouts stand as one of the most enticing benefits for investors and this packaged bakery foods producer is steadfastly committed to enhancing shareholder value. FLO’s stock has increased 3.3% in the past three months compared with the industry’s growth of 1.5%.

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What Else Should You Know?

Flowers Foods is benefiting from the effective implementation of portfolio strategy and investments in marketing and innovation. Despite challenging market conditions, the company’s brands continue to flourish, gaining market share and achieving growth in branded retail volumes. Efforts to enhance profitability in away-from-home and private label segments are also yielding positive results, notably expanding margins.

These factors boosted the company’s first-quarter fiscal 2024 sales, up 2.8% year over year to $1,576.8 million. The pricing/mix remained favorable by 3.1%. Branded Retail sales rose 3.5% to $1,014.9 million, while other sales inched up 1.4% to $561.9 million in the quarter. For the fiscal 2024, management expects sales in the range of $5.091-5.172 billion, suggesting a flat to 1.6% increase year over year.

However, the Zacks Rank #4 (Sell) remains apprehensive of ongoing economic uncertainty and its potential effects on consumer behavior and promotional activities. The company is bearing the brunt of higher labor and technology expenses, as seen in the fiscal first quarter.

Better-Ranked Food Bets

Vital Farms Inc. (VITL - Free Report) offers a range of produced pasture-raised foods. It currently sports a Zacks Rank #1 (Strong Buy). VITL has a trailing four-quarter average earnings surprise of 102.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings suggests growth of 22.5% and 59.3%, respectively, from the year-ago reported numbers.

Utz Brands Inc. (UTZ - Free Report) manufactures a diverse portfolio of salty snacks, currently carrying a Zacks Rank #2 (Buy). UTZ has a trailing four-quarter earnings surprise of 2% on average.

The Zacks Consensus Estimate for Utz Brands’ current financial-year earnings suggests growth of 24.6% from the year-ago reported numbers.

McCormick & Company, Inc. (MKC - Free Report) is a leading manufacturer, marketer and distributor of spices, seasonings, specialty foods and flavors. It currently carries a Zacks Rank of 2.

The Zacks Consensus Estimate for McCormick & Company’s current fiscal-year sales and earnings indicates advancements of 0.3% and 5.6%, respectively, from the year-ago reported figures. MKC has a trailing four-quarter earnings surprise of 5.4%, on average.

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