| We'll dig into the numbers in just a minute, but first, a word of caution: Anytime you see a dividend yield that high, your guard should be up. It doesn't automatically mean that the dividend is unsafe or that the stock is a dog, but the risk of both is certainly elevated. One reason B&G Foods' yield is so high is that the stock has been a disaster. It's been just about cut in half in the past year and is down more than 80% over the past five years. Part of the problem is that cash flow has been very inconsistent. Last year, it slid 54% from $222 million to $103 million. This year, it is forecast to drop another 10% to $93 million. The Safety Net model penalizes stocks for declining free cash flow. The reasoning is very simple: You want to see cash flow growth in order to boost your confidence that the company will be able to afford its dividend in the future. The good news is that B&G's payout ratio is low enough to not set off any alarms. Last year, the company paid out 58% of its cash flow in dividends. This year, that number is forecast to remain the same. In late 2022, B&G Foods slashed its quarterly dividend from $0.475 to the current $0.19. Once a management team has shown a willingness to cut the dividend, the payout is no longer sacrosanct, and investors should be on guard that it could happen again. The saving grace for the company's dividend safety rating is that the payout ratio is reasonable. But if cash flow continues to deteriorate, it could become a problem. B&G Foods' dividend has a high risk of being cut. Dividend Safety Rating: D While we're here, I'd also like to fill you in on something I've been researching for a while now that I'm very excited about. For 163 years, a huge chunk of valuable federal land has been untouched and off-limits... But now, I believe it's about to be unleashed. Not as farmland... But in the form of "innovation zones" that can help America maintain its place as the #1 economy in the world. Importantly, four companies are positioned at the center of it all. I go into more detail in my just-released video: |
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