The Marzetti Company (NASDAQ:MZTI) is an interesting dividend story precisely because it is easy to overlook. Investors who knew it as Lancaster Colony may not immediately connect the new Marzetti name with a business that has increased its regular dividend for 63 consecutive years. The 2025 rebrand also means the company is now operating under a consumer-facing name that is much more closely associated with its food brands. The latest fiscal-year results give both sides of the dividend argument something to work with.

Bull Case

The strongest argument is the track record. The Marzetti Company (NASDAQ:MZTI) increased its regular cash dividend for the 63rd consecutive year in fiscal 2026. The latest quarterly dividend was $1.00 per share, compared with $0.95 in the year-ago quarter, while the fiscal-year dividend was $3.95 per share, up from $3.75. That puts Marzetti among an unusually small group of companies with such a long record of consecutive dividend increases.

That history matters because the company has maintained the streak through very different economic environments. The dividend is not simply the result of a recent management commitment; it is part of a capital-allocation culture that has been maintained for decades. Fiscal 2026 operating cash flow reached a record $283.8 million, up $22.3 million from the prior year. The company paid $108.8 million in dividends during the year. On those figures, the dividend consumed roughly 38% of operating cash flow, leaving substantial cash generation after the dividend.

That is one of the more encouraging aspects of the latest results. The dividend is not being funded by accounting earnings alone. The Marzetti Company (NASDAQ:MZTI) is generating considerably more operating cash than it is distributing to shareholders. The company’s earnings performance also improved. Fiscal 2026 net income was $191.6 million, or $6.98 per diluted share, compared with $167.3 million, or $6.07 per diluted share, in fiscal 2025. Adjusted diluted EPS was $6.83, compared with $6.72 a year earlier.

Marzetti’s fourth quarter produced record gross profit of $114.0 million, while gross margin increased 220 basis points to 24.5%. Cost-saving initiatives played an important role in the improvement. That is important for the dividend because a food manufacturer does not necessarily need rapid revenue growth to support shareholder returns. If management can continue expanding margins and converting earnings into cash, modest sales growth can still translate into stronger dividend coverage.

The acquisition of Bachan’s adds a relatively fast-growing sauce brand to the portfolio. It contributed $15.4 million of fourth-quarter sales after the acquisition closed on May 1, 2026. Management also said Bachan’s retail sales were up 8.7% in the quarter, with total distribution points up 16.6%. This is potentially important beyond the immediate revenue contribution. Marzetti already has a large portfolio of brands and restaurant licensing relationships. Adding brands with growth potential gives management another way to expand the business without depending entirely on mature products.

The company’s fiscal 2027 outlook also calls for additional contributions from Bachan’s, new products, and its licensing program, while management expects to offset moderate input-cost inflation through pricing and cost savings.

Bear Case

A 63-year record is impressive, but the future dividend depends on future cash generation. The Marzetti Company (NASDAQ:MZTI)’s latest results show that sales growth remains fairly modest. Fiscal 2026 net sales increased just 1.1% to $1.93 billion. In the fourth quarter, reported sales actually declined 2.2% to $465.0 million. Even after adjusting for the prior year’s temporary supply agreement with Winland Foods, consolidated sales growth was only 0.4%. That creates an important distinction: Marzetti has demonstrated exceptional dividend consistency, but it is not currently a high-growth business.

The foodservice segment generated fourth-quarter sales of $221.4 million, down 5.3% on a reported basis. Even after excluding the temporary Winland supply agreement, sales were down 0.1%. The weakness is notable because foodservice is a substantial part of Marzetti’s business. The company said gains among leading national restaurant accounts were offset by lower sales to other chains and lower sales of its branded foodservice products. If restaurant demand remains soft, it could make it harder for Marzetti to accelerate overall revenue growth.

The acquisition provides a potential growth catalyst, but it also changed the company’s balance sheet. The Marzetti Company (NASDAQ:MZTI) financed part of the transaction with a $200 million term loan, and fiscal 2026 included $1.8 million of interest expense, compared with none in the prior year.

The Marzetti Company (NASDAQ:MZTI) generated $283.8 million of operating cash flow in fiscal 2026, but it spent $399.3 million on acquisitions and $77.7 million on property additions. It also paid $108.8 million in dividends and repurchased $36.3 million of stock. The result was a decline in cash from $161.5 million at the beginning of the fiscal year to $25.1 million at year-end. The dividend itself was well covered by operating cash flow, but the broader picture is more complicated. Marzetti is simultaneously funding dividends, investing in the business, buying companies, and carrying more debt. Investors should therefore focus on free cash flow and balance-sheet discipline, not just the dividend’s historical streak.

The headline earnings improvement looks strong, but the numbers need context. The company benefited from an $18.5 million gain from the sale of its former Milpitas property. That contributed to the fiscal-year net income improvement. At the same time, Bachan’s generated acquisition-related costs and additional amortization expenses. Management’s adjusted EPS figure of $6.83 compared with $6.72 a year earlier suggests the underlying earnings improvement was much more modest than the reported GAAP EPS increase from $6.07 to $6.98. That matters for dividend investors because the long-term sustainability of the payout ultimately depends on recurring operating earnings and cash flow, not gains from asset sales.

Conclusion

The Marzetti Company (NASDAQ:MZTI)’s 63-year dividend record stands out because it combines a long history of increases with strong operating cash generation, even as the business faces modest sales growth, foodservice pressure, and higher debt following the Bachan’s acquisition.

Overall, Marzetti looks more compelling as a dividend-compounding business than as a high-growth stock. Its dividend remains supported by real operating cash generation, but future increases will depend on whether management can turn Bachan’s, new products, licensing relationships, and cost savings into recurring growth while maintaining balance-sheet discipline.

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Disclosure: None. This article is originally published at Insider Monkey.