Show me the money, Mondelez
I know what you’re probably thinking: “Kraft Foods is the dividend play here!” If we look at this from a pure yield standpoint, then yes, it is. However, if you would like your dividend stocks to show signs of growth so your share price has a shot at increasing along with your dividend, then Mondelez sure looks like the better choice of the two.
To begin with, Mondelez does a phenomenal job of taking care of its shareholders. Announced during the second quarter, Mondelez bolstered its share-repurchase program from just $1.2 billion to a whopping $6 billion through 2016. To put this in a different context, based on Mondelez’s closing price on Friday, the company could repurchase about 195.6 million shares of its own stock — roughly 11% of its outstanding share count — and drop its forward P/E of 17.8 down below 16. Mondelez is making it very clear that boosting shareholder value is important to this management team.
Where Mondelez can really tack on value, though, is through its dividend. As you’ll see, the big drop-off last year relates solely to the spinoff:
Source: Nasdaq.com.
*Assumes payout of $0.14/quarter for remainder of 2013.
Even during the Great Recession of 2009, Mondelez/Kraft Foods Group Inc (NASDAQ:KRFT) was able to maintain its dividend despite the financial catastrophe that was unfolding around them. Also in its second quarter, Mondelez announced that it would boost its payout by 8%, or $0.01, to $0.14 going forward. The new projected yield based on its revised payout is 1.8%.
Foolish roundup
With Mondelez International Inc (NASDAQ:MDLZ), growth and income investors are getting the entire package. They’re getting exposure to rapidly growing emerging-market economies from a snack food and beverage perspective; they have well-recognized brand names to help buoy cash flow and allow Mondelez to pass along price increases with relative ease; and they have a company that may buy back up to $6 billion of its own shares through 2016 with a payout ratio of less than 33%, making dividend growth all but a certainty. I don’t know about you, but that sounds like a tasty recipe for a great dividend stock to me!
The article 1 Great Dividend You Can Buy Right Now originally appeared on Fool.com and is written by Sean Williams.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of, and recommends PepsiCo.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
