Dividend Stocks: This Packaged Foods Company Sees Rapid Dividend Growth

Conagra Brands (CAG), part of IBD’s Dividend Leaders screen, is a dividend stock in focus as the company projects growth and expands its dividend at a rapid rate.

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The company — headquartered in Chicago — is a packaged foods provider that owns various brands including Healthy Choice Meals, Slim Jim, Hunt’s Tomato Sauce and Orville Redenbacher’s popcorn.

Dividend Soars As Growth Powers Forward

For income investors, Conagra Brands offers up a sizable dividend yield of 3.6%, well above the 1.6% average of the S&P 500. Conagra has had a long history of paying dividends. But due to a few dividend cuts over the years, it has missed Dividend Aristocrat status.

Nevertheless, recently the dividend has taken off, having increased 50% over the past three years alone. While not confirmed, investors should expect the next quarterly dividend of 33 cents to be paid out to shareholders of record at the end of April.

It is possible that the dividend could continue to grow at a sizable clip. That’s especially true because Conagra is growing despite pricing headwinds. After reporting earnings of $2.36 per share in the fiscal year ended last May, analysts expect EPS to increase to $2.67 and $2.81 in fiscal 2023 and 2024, respectively.

Dividend Stock Reports Earnings April 5

Investors will get an update on company progress when Conagra reports third-quarter earnings on April 5. Analysts estimate EPS at 64 cents on revenue of $3.09 billion.

If Conagra can continue to meet expectations, investors are in a good position. However, if the company struggles in passing further price increases to consumers, the situation could change.

An area of concern is a high level of total debt, which currently stands at $9.65 billion. S&P Global has this debt rated at BBB-, only one level into investment grade.

Conagra Brands has an IBD Composite Rating of 81. Shares are consolidating and have been finding support at their 200-day moving average in sideways trading action. So far, there’s no clear chart pattern or buy point for this dividend stock.

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