4. The Kraft Heinz Company (NASDAQ:KHC)
Dividend Yield as of January 21: 5.41%
The Kraft Heinz Company (NASDAQ:KHC) ranks fourth on our list of the best Cash App stocks that pay dividends. The American multinational food company specializes in a wide range of snacks and beverages. The company was formed through the merger of Kraft and Heinz, with the intention of boosting profits by reducing costs. However, the merger did not go as planned, leading to a change in leadership. Currently, Kraft Heinz is focusing on a select group of stronger-performing brands. Despite past challenges, the company is showing improvement, particularly in its financial health. Since its peak in 2020, the company has significantly reduced its leverage, indicating that it can navigate through current challenges and reposition its business for future success.
In the third quarter of 2024, The Kraft Heinz Company (NASDAQ:KHC) reported mixed results, continuing to miss analysts’ expectations. It generated $6.38 billion in revenue, reflecting a 2.85% decrease compared to the previous year. However, the company did see a slight improvement in its gross profit margin, which increased by 20 basis points to 34.2%. Kraft Heinz is concentrating on investing in marketing, research and development, and technology to offer consumer-focused solutions and drive future revenue growth. These initiatives are supported by its ability to streamline operations and maintain solid cash flow. In addition, the company is focused on expanding its well-established and emerging food and beverage brands globally.
Despite the challenges it is encountering, income investors can be reassured by The Kraft Heinz Company (NASDAQ:KHC)’s robust cash position. In the most recent quarter, the company showed strong cash generation, with year-to-date operating cash flow rising by 6.7% to $2.8 billion compared to the prior year. Free cash flow also grew by 9.7%, reaching $2 billion. Moreover, the company returned $1.5 billion to shareholders through dividends during the first nine months of the year.
Mairs & Power also highlighted efforts made by The Kraft Heinz Company (NASDAQ:KHC) in its Q3 2024 investor letter. Here is what the firm has to say:
“We added The Kraft Heinz Company (NASDAQ:KHC) to the Fund in the quarter. Kraft Heinz is a leading global food company which possesses a portfolio of iconic brands, including its eponymous ketchup brand. The company has been undergoing an operational transformation focused on driving efficiency gains in supply chain, manufacturing and distribution. These efficiency gains have fueled increased investments in technology, automation, innovation and marketing, which should ultimately drive more consistent organic revenue growth and high single digit earnings per share growth. We expect above-average long-term returns, buoyed by consistent free cash flow generation, opportunistic share repurchases and an attractive 4-5% dividend yield. A modest current valuation affords an ample margin of safety.”
The Kraft Heinz Company (NASDAQ:KHC) offers a quarterly dividend of $0.40 per share and has a dividend yield of 5.41%, as of January 21.
Warren Buffett’s Berkshire Hathaway was the largest stakeholder of The Kraft Heinz Company (NASDAQ:KHC) in the third quarter of 2024. Overall, 38 hedge funds tracked by Insider Monkey owned stakes in the company in Q3.
