We recently published a list of 15 Best Dividend Stocks To Buy and Hold. In this article, we are going to take a look at where General Mills, Inc. (NYSE:GIS) stands against other best dividend stocks to buy and hold.
In recent years, many investors have shifted their focus from dividend-paying stocks to high-growth secular-themed stocks that typically don’t offer dividends. However, history shows that investors shouldn’t overlook dividends. According to estimates by AGF Investments, the long-term case for dividend-paying equities is strong: if a dollar was invested in the broader market Index in 1927 without reinvesting dividends, it would be worth $243 today. In contrast, that same dollar with dividends reinvested would be worth $3,737.
Because of this earnings and income potential, income investors often turn to dividend stocks when the market shifts. While these stocks may not be keeping pace with the broader market, analysts remain optimistic about their future prospects. A report from J.P. Morgan indicated that global equities are approaching a notable period of dividend growth, not just due to a cyclical rise in payouts but also because of a long-term increase in dividend momentum. Over the past 20 years, global dividends per share have grown at an annual rate of 5.6%, but analysts predict this growth will accelerate to 7.6%. The main factor driving this increased growth is the low starting point of payout ratios (dividends as a proportion of earnings). During the Covid pandemic in 2020, many companies cut their dividends, leading to a 12% drop in global dividends, which was a steeper decline than during the Global Financial Crisis. This was a rational response to an uncertain environment with unpredictable effects and duration.
READ ALSO: 10 Most Promising Dividend Stocks According to Hedge Funds
However, equity markets rebounded strongly as global earnings soared, primarily driven by Big Tech and, more recently, AI. Since dividends are typically determined by conservative boards and management, they tend to lag behind earnings during significant earnings surges. As a result, dividend payout ratios are now near their lowest levels in 25 years, meaning companies are paying out less compared to historical averages. Simply returning to a more typical payout level could contribute an additional 2% annual growth over the next five years. This isn’t just a theoretical scenario—global dividend growth has already started to exceed earnings growth in seven of the past eight quarters, as reported by J.P. Morgan.
While recent market gains have largely been driven by a small group of non-dividend-paying companies, this is starting to shift. In 2024, many big tech companies initiated their dividend policies, highlighting the importance of returning capital to shareholders and positioning dividends as a complement to share buybacks. The report highlighted that although the dividend yields from these tech giants are initially modest, the total amount they are committing to dividends is significant—$17 billion collectively over the next year. More importantly, these actions send a strong signal to the market.
Income-focused investors have increasingly turned their attention to dividend income, making it a more prominent part of personal earnings. A report by S&P Dow Jones Indices reveals that dividend income has risen from 2.68% in Q4 1980 to 7.88% in Q2 2024, demonstrating its growing importance as an income source. The report further highlighted that since 1936, dividends have accounted for over a third of total equity returns, with the rest coming from capital gains.
Our Methodology
For this list, we scanned through various credible sources, including Business Insider, Forbes, Morningstar, and Barron’s, and identified their consensus picks from their recent articles. Next, we sorted these companies based on the number of hedge funds in Insider Monkey’s database that owned stakes in these companies, as of Q3 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
A worker in a production facility packaging arbitrary food products, reflecting the company’s commitment to comprehensive production standards.
General Mills, Inc. (NYSE:GIS)
Number of Hedge Fund Holders: 30
General Mills, Inc. (NYSE:GIS) is a Minnesota-based food processing company that markets processed consumer food through retail stores. The company reported strong earnings in fiscal Q2 2025. It reported revenue of $5.24 billion, which showed a 2% growth from the same period last year. The revenue also beat analysts’ estimates by $97 million. Operating profit reached $1.1 billion, reflecting a 33% increase, largely due to higher gross profit and the absence of a goodwill impairment charge recorded in the prior year.
With decades of experience, General Mills, Inc. (NYSE:GIS) has continually met customer expectations, including during the COVID-19 pandemic. During this time, business activity surged as more consumers turned to home-cooked meals amid dining restrictions. Its core North American retail segment performed well, benefiting from heightened demand for organic products, meal solutions, and baking essentials.
General Mills, Inc. (NYSE:GIS) has a strong dividend history because of its stable cash generation. In the first six months of FY25, the company generated $1.8 billion in operating cash flow, up 19% from the prior-year period. During this period, it also returned $676 million to shareholders through dividends. The company has never missed a dividend in 125 consecutive years, making GIS one of our list’s best dividend stocks. It currently offers a quarterly dividend of $0.60 per share and has a dividend yield of 4.01%, as of February 4.
At the end of Q3 2024, 30 hedge funds tracked by Insider Monkey held stakes in General Mills, Inc. (NYSE:GIS), up from 29 in the previous quarter. The consolidated value of these stakes is over $674 million. With nearly 2 million shares, Citadel Investment Group was the company’s leading stakeholder in Q3.
Overall, GIS ranks 15th on our list of best dividend stocks to buy and hold. While we acknowledge the potential for GIS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than GIS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
