The Marzetti Company (NASDAQ:MZTI) provides income investors with a dividend yield of nearly 4% and an outstanding record of dividend payments. It has raised its regular cash dividend for 63 consecutive years, which puts it in the small group of U.S. companies that have achieved such a long succession. The most recent quarterly dividend is $1.00 per share, amounting to $4.00 per year and giving a forward yield of 3.96%. The real issue is whether Marzetti will be able to raise its dividend while at the same time funding growth and handling the debt associated with acquisitions. This year hasn’t been going well for MZTI, as the stock has declined by over 37% so far. Still, its dividend growth record and attractive yield may appeal to income investors looking for opportunities among 52-week low stocks.
Image by Steve Buissinne from Pixabay
Marzetti completed the acquisition of Bachan’s, a Japanese barbecue sauce brand, in May 2026 for about $399 million. Sales for Bachan’s amounted to around $87 million over the 12 months ending December 2025. The transaction provides Marzetti with additional growth potential in the sauce sector and a chance to extend its distribution via its current retail and foodservice network.
Its established brands also have room for growth; in September, the company expanded its New York Bakery range by introducing new baked bites, a cheesy focaccia, and garlic bread loaves. Previous launches had been protein ranch dressing and dip, together with further Buffalo Wild Wings-branded sauces. These products could be of use in helping Marzetti to draw in new customers and secure repeat purchases without having to depend entirely on raising prices.
Another advantage is the cost reduction. In fiscal 2026, the company’s gross profit was improved by efficiency measures, and its operating cash flow amounted to $283.8 million. The amount of cash generated enables management to use the funds for capital expenditures and to keep up the payments to shareholders.
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What might threaten the growth of dividends?
The difficulty lies in converting product launches and acquisitions into long-term organic growth; retail sales volumes fell in fiscal 2026, and part of the foodservice revenue was due to a temporary supply agreement which has now ended. Marzetti is also affected by rising input costs, pressure on prices, and uncertainty about the effect of the Cyclospora outbreak on demand for its products. The company anticipates moderate inflation in fiscal 2027 and intends to counter it by raising prices and achieving cost savings.
Bachan’s acquisition adds another point to consider. Marzetti ended fiscal 2026 with $200 million of debt and $25 million in cash. Although this is reasonable in view of its cash generation, payments on the debt and the costs of integration might restrict the rate at which future dividend increases can take place.
In fiscal 2026, Marzetti paid out $108.8 million in dividends. With an estimated free cash flow of about $206 million after capital expenditures, the payout ratio was around 53%. There is therefore a reasonable buffer for dividend payments, although the cash flow was in part due to tax-related timing effects, and so the full increase should not be taken as recurring. Check out our list of 52-week low dividend stocks, which features companies trading near their lows but still offering solid dividend yields.
The Verdict
Marzetti’s dividend appears to be well covered, and the company’s long track record of growth gives people confidence. The main point to consider is whether Bachan’s new products and cost reductions will be able to boost organic growth while the company handles its acquisition debt. Investors can currently enjoy a highly attractive income stream, but future increases in the dividend will have to depend on performance rather than merely on the company’s past history.
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This article is originally published at Insider Monkey.
