Flowers Foods Continues Annual Dividend Boosts With Current 6% Hike (FLO)
By: Ned Piplovic,
Featured Image Source: https://www.flowersfoods.com/brands
Despite a dip of more than 10% in early May, Flowers Foods, Inc. (NYSE:FLO) achieved share price growth of nearly 9% in the past year. This substantial stock appreciation nicely complements the company’s long-term record of dividend boosts.
The recent share price pullback also helped to raise the company’s dividend yield, which is now higher than FLO’s own average over the past few years and outperforms the industry average yields across the board.
With a track record of well over a decade of consecutive annual dividend boosts and a stock that seems to have stabilized of late, dividend income investors might want to take a closer look at this equity. The upcoming increased dividend payment goes ex-dividend on June 6, 2018 and will be paid into shareholder accounts on June 21, 2018.
Flowers Foods, Inc. (NYSE:FLO)
Headquartered in Thomasville, Georgia and founded in 1919 as Flowers Industries, the company changed its name to Flowers Foods, Inc. in 2001. The company produces and markets bakery products in the United States through two business segments – Direct Store Delivery (DSD) and Warehouse Delivery. The DSD segment produces and markets fresh breads, buns, rolls, tortillas and snack cakes. This segment offers its products primarily under the Nature’s Own, Wonder, Cobblestone Bread Company, Tastykake and Dave’s Killer Bread brand names. The company operates 39 bakeries in this segment and sells its products through a network of independent distributors to retail and foodservice customers. The Warehouse Delivery segment produces snack cakes, frozen breads and rolls for national retail, foodservice, and vending customers through a network of warehouse channels. This segment markets its products under the Mrs. Freshley’s, Alpine Valley Bread and European Bakers brand names. Additionally, this segment also sells products under franchised and licensed trademarks, such as Sunbeam, Bunny and Sara Lee.
As the chart below shows, FLO has been in a consistent, long-term uptrend for the last two decades. An uncharacteristic spike in 2013, lasting through 2015, sent the stock significantly higher than its long-term average growth. As a result, the share price is currently 10% lower than it was five years ago and more than 25% lower than its all-time high from October 2015. However, the spike seems to be over now, and stock is currently back to following its long-term growth trend.
Flowers Foods started out the current 12-month period with a 9% decline towards its 52-week low of $16.80 on August 10, 2017. After bottoming out, FLO shares rose 35% to a 52-week high of $22.82 on April 18, 2018. Unfortunately, shares once again dropped sharply in mid-May after the company’s financial report did not meet all of analysts’ expectations. Shares have since recovered some of their losses and closed on May 24, 2018 at $20.08, which was 8.6% higher than it was one year ago and about 20% above the 2017 low.
Flowers Foods’ latest quarterly earnings were a mixed bag. Earnings per share (EPS) for the first quarter of 2018 fell one cent short of the expected $0.30. However, the company’s actual sales of $1.21 billion marginally edged out the forecasted $1.20 billion figure. This was another case of a reasonably solid company getting sold down by stringent earnings expectations
After paying a $0.17 per share dividend for the last four quarters, FLO plans to boost its quarterly dividend by 5.9% to $0.18 per share. On an annual basis, this converts to a $0.72 per share payout and a forward yield of 3.6%, which is 23.6% higher than the company’s five-year average yield. This forward yield is also 83% higher than the 1.96% average yield of the entire Consumer Goods sector and 70% higher than the 2.1% average yield of all the companies in the Processed & Packaged Goods market segment. FLO’s yield outperforms the yield of only dividend-paying companies in the segment by more than 12%.
Since undergoing a name change and reorganization in 2001, Flower Foods has rewarded its shareholders with dividend boosts every year. Over that period, the company has advanced its total annual dividend amount more than 25-fold, which corresponds to a 22.5% average annual growth rate. Even just over the past decade, the company has nearly tripled its total annual dividend amount.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.