April 20, 2025 a 07:46 am
KHC: Dividend Analysis - The Kraft Heinz Company
The Kraft Heinz Company showcases a robust dividend yield, although the growth has been stagnant over recent years. With a satisfactory history of dividend payments spanning 11 years, the company appears committed to returning value to its shareholders. The financial metrics present a mix of strengths and areas for improvement, making KHC a candidate for cautious optimism.
📊 Overview
Kraft Heinz operates within a stable sector, reflecting its capacity to maintain a consistent dividend yield of approximately 4.97%. The current dividend per share is $1.60, with a consistent history of 11 years, marking its reliability in dividend policies. Despite no recent cuts or suspensions, growth remains stagnant, inviting consideration of future potential enhancements.
| Metric | Details |
|---|---|
| Sector | Consumer Goods |
| Dividend Yield | 4.97% |
| Current Dividend per Share | $1.60 USD |
| Dividend History | 11 years |
| Last Cut or Suspension | None |
📈 Dividend History
Kraft Heinz's consistent history of dividend payments underscores its commitment to returning investors' capital. This consistency suggests reliability, providing investors a degree of income predictability. Long-term investors may view this stability favorably, particularly in volatile market conditions.
| Year | Dividend per Share (USD) |
|---|---|
| 2025 | 0.40 |
| 2024 | 1.60 |
| 2023 | 1.60 |
| 2022 | 1.60 |
| 2021 | 1.60 |
📉 Dividend Growth
The stagnation in dividend growth over the past three to five years is notable. This lack of growth attracts attention, as potential investors often seek growing dividends indicative of rising fiscal health and expansion possibilities. However, Kraft Heinz's ability to maintain a significant yield amidst static growth remains a testament to its stability.
| Time | Growth |
|---|---|
| 3 years | 0% |
| 5 years | 0% |
The average dividend growth is 0% over 5 years. This shows moderate but steady dividend growth.
✅ Payout Ratio
The payout ratio paints a clear picture of a company's ability to sustain its dividend payments through its earnings. Kraft Heinz's EPS-based payout ratio of 70.20% and a free cash flow-based ratio of 63.15% indicate a moderately high level of earnings distribution to shareholders, suggesting potential constraints on future dividend increases if earnings do not grow.
| Key Figure | Ratio |
|---|---|
| EPS-based | 70.20% |
| Free cash flow-based | 63.15% |
The EPS payout ratio of 70.20% reflects a significant portion of earnings distributed as dividends. At 63.15%, the FCF ratio shows that dividends are fairly covered by cash flows, albeit with limited growth potential unless earnings improve.
💵 Cashflow & Capital Efficiency
The ability of Kraft Heinz to manage its cash flow effectively ensures its capacity to support ongoing operations and dividends. This data helps in assessing the business's efficiency in using its capital and generating sufficient cash flow.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Free Cash Flow Yield | 8.57% | 6.53% | 3.11% |
| Earnings Yield | 7.71% | 6.29% | 4.73% |
| CAPEX to Operating Cash Flow | 27.82% | 25.48% | 37.10% |
| Stock-based Compensation to Revenue | 0.42% | 0.53% | 0.56% |
| Free Cash Flow / Operating Cash Flow Ratio | 75.53% | 74.52% | 62.90% |
The cash flow and capital efficiency metrics indicate sustainable cash generation, with moderate room for capex and stock-based compensation. However, the high net debt to EBITDA raises red flags concerning the company's leverage risks.
💰 Balance Sheet & Leverage Analysis
Assessing the balance sheet and leveraging aspects is crucial to understanding the company's long-term financial viability and its ability to withstand adverse conditions or interest rate hikes.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Debt-to-Equity | 0.40 | 0.40 | 0.41 |
| Debt-to-Assets | 0.23 | 0.22 | 0.22 |
| Debt-to-Capital | 0.29 | 0.29 | 0.29 |
| Net Debt to EBITDA | 6.82 | 3.38 | 3.95 |
| Current Ratio | 1.06 | 0.99 | 0.87 |
| Quick Ratio | 0.59 | 0.54 | 0.47 |
| Financial Leverage | 1.79 | 1.82 | 1.86 |
The data exhibits manageable debt levels with a consistent debt-to-equity ratio and improving quick ratio, indicating strong liquidity. The increase in net debt to EBITDA during improvements raises questions about the company's cost structure and margins.
📊 Fundamental Strength & Profitability
Fundamental and profitability metrics offer insight into operational efficiency and the potential for long-term stock value appreciation.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Return on Equity | 5.58% | 5.76% | 4.85% |
| Return on Assets | 3.11% | 3.16% | 2.61% |
| Net Margin | 10.62% | 10.72% | 8.92% |
| EBIT Margin | 6.84% | 17.06% | 14.68% |
| EBITDA Margin | 10.51% | 20.67% | 18.20% |
| Gross Margin | 34.70% | 33.51% | 30.67% |
| Research & Development to Revenue | 0% | 0% | 0% |
The profitability indicators reveal steady returns with a slight decline in the return on equity. The gross and net margins indicate robust cost control and efficient operations, albeit with a room for improvement in R&D for innovation.
🗣️ Price Development
📐 Dividend Scoring System
| Category | Score | Bar |
|---|---|---|
| Dividend Yield | 4 | |
| Dividend Stability | 3 | |
| Dividend Growth | 2 | |
| Payout Ratio | 3 | |
| Financial Stability | 3 | |
| Dividend Continuity | 4 | |
| Cashflow Coverage | 3 | |
| Balance Sheet Quality | 3 |
Total Score: 25/40
Rating
The Kraft Heinz Company offers a stable dividend profile with high payout ratios and satisfactory stability metrics. While lacking in recent growth, the overall dividend potential mixed with healthy cash flow coverage positions KHC as a sound investment, albeit with the need for careful monitoring of future growth strategies and leverage management.