Why Has Kraft Foods Group Inc (KRFT) Stock Soared After Its Spinoff?

That emphasis came out in its most recent quarterly report last month, when Kraft crushed earnings expectations in producing 2% growth in sales. Operating income rose 9% on gains in productivity and falling overhead, and although the company didn’t raise its earnings guidance for the full year, Kraft is clearly putting in place the drivers it needs to accomplish its long-term goals.

Most importantly, dividend investors prefer Kraft to Mondelez, given Kraft’s dividend yield being more than double what Mondelez pays out. Greater growth could help Mondelez raise its payout more sharply in the future, but with Kraft’s focus on cash flow rather than growth, it should have fewer needs than Mondelez to reinvest cash into business growth.

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Kraft Foods Group Inc (NASDAQ:KRFT) stock has proven to be a smart investment for those who held onto their shares after the spinoff. For investors, the performance of Kraft stock serves as a good reminder that fast growth isn’t always a necessary component of strong stock performance, especially when moves to boost efficiency pay off on the bottom line.

The article Why Has Kraft Stock Soared After Its Spinoff? originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger and The Motley Fool have no position in any stocks mentioned. You can follow Dan on Twitter @DanCaplinger.

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