What if I told you there is an S&P 500 stock that has a dividend yield of at least 6.78% that’s paid its dividend uninterrupted for 127 years straight? And which is trading at approximately 50.0% of its value in 2024, on a PE of 11.34 times earnings.
The company has grown its dividend by +22.0% over the last five years, and though the gains are nothing spectacular, it has also seen revenue and earnings growth of +10.55% and +16.62 respectively, in that time frame.
That stock is GIS US General Mills. Interestingly, its share price is up by some +7.63% over the last month, during which time it's posted 9 new highs.
We’ve also had 10 days in the last month, where volume traded in GIS was higher than the current daily average volume. I have highlighted these below.
When this is combined with the recent share price gains, we could infer that traders are getting interested in General Mills once more.
Coincidentally, General Mills reported earnings on July 1st, those earnings came in way ahead of forecasts, with EPS of 95 cents vs expectations of 80.0 cents. Management also announced a plan to cut costs by $3.0 bln by 2030, which sounds a long way off but really isn't.
General Mills is not alone among S&P 500 stocks in having an attractive dividend yield.
The table below showcases another 19 names with an estimated dividend yield of 5.0% or greater.
As you can see, quite a few of these stocks are underperforming or down year to date.
What interests me is the fact that some of them are trying to turn things around.
For example, Comcast CMCSA US announced this week that it was to split into two separate companies, spinning out its TV and film assets into one company and its telecoms business into another.
In the last 5 days, Comcast has seen its stock price rise by +7.68%, suggesting that the market likes what it hears.
Source: Market.Radar
Not every stock in this list is down year to date; in fact, Altria MO US and Healthpeak Properties are up either side of +30.0%.
Other companies like HPQ US, HP Inc have made more modest gains (or had. When I started writing/researching this article, HPQ stock was up year to date, but by mid-week, those gains had been frittered away.
However, I think this is a stock that's worth keeping an eye on, because they rallied by more than +40.0% in mid-May on talk that Nvidia NVDA US was considering the purchase of a PC maker.
Those rumours have gone away for now, at least, but I am a great believer in the adage that “there is no smoke without fire”, and we certainly saw some flames in mid-May.
Source: Barchart.com
Earnings season proper in the US is just around the corner
And I wonder how many more names in this list, and others like it, might surprise to the upside when it’s their turn to report?
I note that value stocks, which is how many dividend payers are categorised, have been outperforming their growth-oriented peers in recent weeks, as concerns about the longevity of the AI trade have come to the fore.
We can see this in the chart below, which shows the Vanguard Value ETF VTV (in black ) versus the Vanguard Growth ETF VUG (drawn in pink).
Source: Barchart.com
The lower window tracks the two-month performance of the pair. VTV has outperformed VUG by more than +100.0% in this period, which suggests to me that traders are looking for opportunities away from the technology sector and the MAG 7.
Could this trend continue across the summer months?
We will see in due course, but let's be prepared and on the lookout for it regardless.
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