We recently published a list of 12 Highest Dividend Stocks to Buy on Cash App. In this article, we are going to take a look at where The Kraft Heinz Company (NASDAQ:KHC) stands against other highest dividend stocks to buy on cash app.
Technology has seamlessly woven itself into our daily lives in today’s digital era, significantly impacting how we manage finances. The shift from physical wallets to digital platforms is becoming increasingly common. Cash App has become a prominent player in the digital financial space, steadily growing in popularity. This mobile payment service allows users to send, receive, and request money from individuals and businesses alike. Since its launch in 2013, Cash App has become one of the most widely used digital wallets in the US, competing with other platforms like Venmo and Zelle. The Consumer Financial Protection Bureau (CFPB) reported that Cash App now boasts over 56 million accounts, with Block, its developer, earning over 50% of its gross profit from the app in 2023.
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The pandemic served as a catalyst, speeding up the rising trend of app usage, especially in the financial sector. With lockdowns and social distancing measures in place, people increasingly relied on online platforms for shopping, highlighting the importance of contactless payments. This change in consumer habits drove a surge in app usage, enabling a smooth transition to remote and contactless transactions. Zelle, the peer-to-peer money transfer app, reported a 27% increase in network transactions during the first half of 2024, with nearly $500 billion in payments processed. In the first six months of the year, consumers and businesses completed 1.7 billion transactions across 143 million accounts, as reported by Bloomberg.
This mainly highlights the promising future of online payments and their continued growth across upcoming generations. In fact, Block CFO Amrita Ahuja shared with CNBC’s Jim Cramer that Cash App’s payment services are particularly popular among younger consumers. Ahuja pointed out that the Cash App card, a free Visa debit card, has gained significant traction with this demographic. She also highlighted that Cash App successfully engages the younger generation through initiatives like a family program, which enables adults to sponsor accounts for teenagers.
That said, with success comes increased risk. Recently, Cash App has faced challenges, as the CFPB accused the platform of enabling widespread fraud and misleading its users. In 2023, Hindenburg Research, a well-known short seller, claimed that Block had inflated the number of Cash App users and highlighted illegal activities on the app. Block dismissed the report as “factually inaccurate and misleading.” In its enforcement action, the CFPB stated that Block is legally obligated to investigate and resolve disputes regarding unauthorized transactions, but described the company’s efforts as “severely lacking.” Instead, Block reportedly directed users to request their banks to reverse transactions, which Block would subsequently deny. As a result, Block will pay up to $120 million in refunds to consumers, establish a 24-hour customer service program, and pay a $55 million fine.
Across different investment platforms, investors consistently prioritize generating cash flow. This focus on cash generation drives them towards dividend stocks, which are well-known for offering shareholders a steady stream of income.
Our Methodology
For this article, we reviewed multiple reliable websites and videos that discuss dividend stocks available on Cash App. Our goal was to identify stocks that were consistently recommended by credible sources and analyst reports. After analyzing the gathered information, we selected 12 stocks that stood out due to their dividend yields exceeding 4% as of January 21. These stocks are ranked in order of their dividend yields, starting from the lowest. We also considered hedge fund sentiment around each stock using Insider Monkey’s data for 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 closeup of an assembly line worker inspecting a newly produced jar of condiments and sauces.
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.
Overall, KHC ranks 4th on our list of highest dividend stocks to buy on cash app. While we acknowledge the potential for KHC 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 KHC 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.
