B&G Foods Boast Strong Growth, Big Dividend

Michelle Remo, “Big 4″ observer
September 21, 2012 /

Food producers are not typically the kind of companies that garner the attention of growth investors. ButB&G Foods ( BGS ) is one such food company, because its profit growth is decent.

The Parsippany, N.J.-based company may not be a household name, but it makes and distributes some familiar products, such as Cream Of Wheat and Ortega Mexican food products. It also produces and distributes a barrage of other food products under a wide variety of labels.

Since 2005, B&G Foods has delivered increased earnings each year, except the tough times in 2008. It has a five-year earnings growth rate of 28%, which is bigger than the growth rates of food giants such asConAgra Foods ( CAG ),General Mills ( GIS ) andKraft Foods ( KFT ).

B&G has made a string of acquisitions over the years. In 2003, it bought the Ortega brand fromNestle ( NSRGY ). Then in 2007, it bought Cream Of Wheat from Kraft Foods. Last year it acquired Culver Specialty Brands from Unilever (UL).

On Wednesday, the firm announced that it’s buying New York Style and Old Style brands fromChipita America for about $62.5 million in cash. The deal is expected to add $45 million to $50 million to next year’s sales.

In the first two quarters of the year, earnings grew 30% and 27%, respectively. Sales rose 20% and 15% over the same two periods, lifted by contributions from its Culver Specialty Brands buyout. Revenue had previously grown at single digits for a number of quarters.

Analysts polled by Thomson Reuters see profit rising 27% this year. The estimate was recently revised higher. But growth is slated to slow to 6% in 2013.

Besides growth, B&G also has rewarded investors with dividends, which it has paid each year since going public in 2004.

B&G currently pays 27 cents a share each quarter. The company has boosted its payout three times since 2011, raising its dividend nearly 60%.

On an annualized basis, B&G Foods pays $1.08 a share for a yield of about 3.4%. It has the fourth highest yield among the 18 dividend-paying companies in the Foods-Packaged industry group.

 

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