6. The Kraft Heinz Company (NASDAQ:KHC)
Upside Potential as of December 19: 19.4%
With an upside potential of 19.4%, The Kraft Heinz Company (NASDAQ:KHC) ranks sixth on our list of the best dividend leaders. The American multinational food company specializes in a wide range of snacks and beverages. The company, formed through the 2015 merger of Kraft and Heinz, has not achieved the expected results from the merger. As a result, it is now refocusing its strategy by eliminating underperforming products and concentrating on its core offerings. Despite these challenges, income investors can take comfort in the company’s strong cash position. In its latest quarter, Kraft Heinz demonstrated solid cash generation, with year-to-date operating cash flow increasing by 6.7% to $2.8 billion compared to the previous year. Free cash flow reached $2 billion, reflecting a 9.7% year-over-year growth. Moreover, the company returned $1.5 billion to shareholders through dividends in the first nine months of the year.
Overall, The Kraft Heinz Company (NASDAQ:KHC) posted mixed earnings, continuing to fall short of analysts’ estimates. It reported $6.38 billion in revenue, marking a 2.85% decline from the same period last year. However, the company saw an improvement in its gross profit margin, which rose by 20 basis points to 34.2%. Kraft Heinz remains focused on investing in marketing, research and development, and technology to provide value-driven solutions for consumers and support future revenue growth. These efforts are bolstered by the company’s ability to optimize operations and maintain strong cash flow. Furthermore, it is committed to expanding both its established and emerging food and beverage brands on a global scale.
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) currently pays a quarterly dividend of $0.40 per share and has a dividend yield of 5.32%, as recorded on December 19.
As of the close of Q3 2024, 38 hedge funds in Insider Monkey’s database held stakes in The Kraft Heinz Company (NASDAQ:KHC), compared with 43 in the preceding quarter. These stakes have a total value of over $12 billion. With nearly 326 million shares, Berkshire Hathaway was the company’s leading stakeholder in Q3.
