General Mills, Inc. (GIS), Kraft Foods Group Inc (KRFT), and Kellogg Company (K): 3 Packaged Foods Stocks for Your Income Portfolio

Although its portfolio comprises several worldwide leading brands (including Special K, Frosted Flakes, Corn Flakes, Froot Loops, and even Pringles, acquired from Procter & Gamble about a year ago) and the management maintains a strong focus on constant innovation, brand building, international expansion, and cost control, I’d recommend staying away from this stock at the time.

After missing consensus estimates, mainly due to the high pressure exerted on its margins by rising raw material and labor prices, along with weak demand in its European segment, Kellogg Company (NYSE:K)’s future looks uncertain and the sustainability of its dividend policy is questionable. Other concerns revolve around rising distribution costs, packaging, and promotional and advertising campaigns. Moreover, its large international exposure makes it particularly susceptible to currency fluctuations.

In addition, the Pringles acquisition may prove difficult to integrate and could divert management’s focus from its main goal of correcting past mistakes, mainly associated with under-investing and supply chain issues.

Keeping an eye on a company as large and as moated as Kellogg Company (NYSE:K) might not be a bad idea.

Bottom line

Although all three companies described above hold sustainable growth prospects and pay out juicy dividends. I’d recommend only adding General Mills, Inc. (NYSE:GIS) and Kraft Foods Group Inc (NASDAQ:KRFT) to your income portfolio, while staying away from Kellogg Company (NYSE:K). Buy, hold, and prepare to perceive regular dividends that will help you support your everyday expenses.

The article 3 Packaged Foods Stocks for Your Income Portfolio originally appeared on Fool.com and is written by Victor Selva.

Victor Selva has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Victor is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.