The Kraft Heinz Company (NASDAQ:KHC) keeping its quarterly dividend at $0.40 per share was not unexpected. Still, the fact that the payout has not increased in seven years is something income investors cannot easily overlook. The bigger question is whether the company is finally getting close to raising the dividend or if $0.40 is still the level it can comfortably afford.
The Kraft Heinz Company (NASDAQ:KHC) cut its quarterly dividend by about 36% in February 2019, taking it from $0.625 to $0.40 per share. It has stayed there ever since. The latest dividend announcement keeps the payment unchanged at $0.40, giving shareholders an annual payout of $1.60 per share.
The Bull Case: Cash Flow Supports the Current Dividend
The strongest argument in favor of Kraft Heinz’s dividend is its cash flow. During the first half of 2026, the company generated $2.1 billion in operating cash flow, up 8.2% from the same period last year. Free cash flow also increased 10.3% to $1.7 billion. Kraft Heinz returned around $0.9 billion to shareholders through dividends during the period.
This suggests that the company is not struggling to cover its current dividend. Instead, management appears to be taking a careful approach to how it uses its cash. Kraft Heinz plans to invest about $700 million in 2026 across marketing, research and development, and new products. The goal is to strengthen its brands and improve the business. If those investments help bring sales volumes back up and improve margins, the company could have more flexibility to increase the dividend later.
There has also been some improvement in the company’s 2026 outlook. Kraft Heinz now expects organic net sales to decline between 0.5% and 2.0%, compared with its previous forecast of a 1.5% to 3.5% decline. Adjusted earnings per share are expected to range from $2.03 to $2.09.At the midpoint of that guidance, the $1.60 annual dividend represents a payout ratio of roughly 77%. That is manageable, but it does not leave a huge amount of room for a meaningful increase if earnings remain under pressure.
The Bear Case: The Business Still Needs More Investment
The main concern is that The Kraft Heinz Company (NASDAQ:KHC) still has other areas that need attention. The company is increasing marketing spending to at least 6% of sales and plans to add another $100 million to its marketing efforts. These investments could help strengthen its brands and support sales, but they will also put some pressure on the business in the near term.
This leaves management with a choice. It can return more cash to shareholders through a higher dividend, or it can put more money back into the business. Right now, Kraft Heinz appears to be giving greater priority to its brands and products.
There is also an opportunity cost for income investors. A dividend yield of roughly 6% is attractive, but the payout has not grown since 2019. Investors looking for both income and regular dividend increases may find other consumer staples more appealing.
The 2019 dividend cut is worth remembering, too. It showed that management is willing to reduce the payout when the company faces financial pressure. The current dividend is stable, but seven years of stability does not necessarily mean dividend growth is around the corner.
Peer Context & Investor Takeaway
The Kraft Heinz Company (NASDAQ:KHC) trades at a forward earnings multiple of around 12x and offers a dividend yield of roughly 6.5%. That can make the stock attractive to investors primarily looking for income. At the same time, the relatively low valuation reflects investor concerns about the company’s weak top-line growth and limited growth prospects.
The Bottom Line: The Kraft Heinz Company (NASDAQ:KHC) has enough cash flow to support its current dividend, which is a positive for income investors. The bigger question is when the company will be comfortable enough with its business to raise the payout. Until sales volumes and margins show more consistent improvement, KHC looks more like a high-income stock than a dividend-growth investment.
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Disclosure: None. This article is originally published at Insider Monkey.
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