A first time for me! September is my birthday month so a while ago I celebrated my birthday with my loved ones. Although not required there is usually a few gifts here and there, mostly money. Since my financial “awakening” I’ve been very careful what to do with my money, so instead of buying another Bluray for my evenings entertainment I’ve decided to purchase some more shares!
Since GIS was still on my watchlist and all signs were green I’ve added 5 shares to my already existing position. I’ve bought the shares @ $52,20, dollar cost averaging for the second time! So my average cost at this time is (5 x 58,83)+(5 x 52,20) / 10 = $55,52.
| General Mills | |
| P/E | 18,71 |
| Yield | 3,75% |
| Payout Ratio | 63% |
| Trackrecord | 13+ years of dividend growth |
| Valuation | $1,80 above 52-week low | $11,98 below 52-wk high |
With a quarterly dividend of $0,49 this should bring me (5 x 0,49 x 1 (one payout in the last quarter) -15% tax = $2.08 closer towards my goal for 2017. My forward annual income should ofcourse increase with four times that amount: $8,32 to a total of $165,15.
As always your comments are much appreciated.
Financially free in 10 years 
I think you made an excellent choice with GIS. I also recently purchased the company adding it to my portfolio. It’s a solid company with a great economic moat. And, I think there’s overall safety in the companies ability to pay its dividends.
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Thanks DP, I feel the same way. On to many more dividends from GIS! 😁
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I cannot agree with your purchase here. GIS, like every other major processed food company, has struggled since 2014 with changing purchasing habits of consumers.
Decreasing top lines even with expensive acquisitions, and cutting the bottom line can only help so much until it hurts.
That being said, the dividend is safe and out of all the processed food companies GIS is the best valued and the divvy is safe. But I prefer to not have the companies I invest in have decreasing revenues and profits while still trading above 15X P/E.
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Hi Mr. DD, I would like to thank your for your constructive criticism. Posts like yours help me reevaluate my purchases and learn from others.
I think GIS made a few good steps towards the more natural food trend with the acquisition of Organic but you are right, a lot more is needed for happy GIS customers.
I will take your remarks into account for my next purchases, thanks again!
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I have GIS stock on my watchlist, however I’m contemplating removing it as I don’t think I will be buying it any time soon.
I’m not a big fan of process foods and don’t trust their so called natural products. There were several lawsuits filed in the past several years against GIS for various reasons (including deceiving customers and marketing natural foods that were not natural or were contaminated).
Even if we just look at the stock, it is still quite expensive on P/E basis for a staple food company, and this is after a nearly 30% decline. Dividend is nice, but not good enough if you look at the dividend growth which has slowed down to merely 2% from previous double digit growth.
I think future is going to be tough for GIS as the trend to eat healthy and natural food grows while process foods are left on the shelf.
In any case, I wish you the best with your investment.
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Thanks for your extensive reply, very interesting and again something to learn from. Are there any stocks in the same industry you are watching?
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I have Smuckers (SJM) on my watchlist. They have similar dilemma as GIS, but I have heard good things about their natural Jams and Butters. Though they are facing some serious pricing pressures from the Whole foods and other organic/natural brands and supermarkets. It would have to get much cheaper for me to consider buying it.
One and only food stock that I currently own is Flowers Food (FLO), I bought the stock last year when it was trading in the $15 range and around PE 15. It’s a bit expensive now but still pays a nice 3.6% yield and a growing dividend. I also buy and eat their whole grain bread, the famous “Dave’s Killer Bread”. It is one of the best and premium healthy breads out there.
Rice and bread are two essential staples for most people’s diet, so I think they will do fine long-term.
Other than that I stay away from food, grocery, and restaurant related stocks as trends and health concerns change quickly and people can be very picky about their food. I know I am.
I consider process food as new tobacco, it should come with warning signs.
Take care
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I love the birthday buy. I did the same thing a few months ago for myself when I started a position with O. Might as well treat yourself to something nice right? GIS is a solid choice. I also own it and want to buy more when more capital opens up so I can average down on my cost basis. Adds a little more dividend income as well. Always helps.
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Hi DD, I also averaged down with this buy, stock dropped quite a bit after my initial purchase. I think this is something I’m going to do every year! 🙂
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Congrats on the great birthday buy! GIS is a great dividend payer at a great price right now. It was on my last watch list in fact.
Bert
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Hi Bert, thanks for stopping by! This buy seems to generate some mixed feelings, which is very educational. Glad you liked it!
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