GIS - General Mills is sized up favorably by Moody's as investors eye higher dividends

2023-03-28 14:21:47 ET

General Mills ( NYSE: GIS ) was evaluated by Moody's following a beat-and-raise earnings report . The ratings agency assigned a Baa2 ratings to proposed senior unsecured 10-year notes from General Mills ( GIS ), which is indicative of moderate credit risk. The  outlook on General Mills was set at Stable.

Moody's noted that General Mills' ( GIS ) ratings reflect its diverse portfolio of well-known packaged food brands, as well as its top-tier market share positions in core food categories. The company's operating profit margins are noted to have come under some pressure recently due to cost inflation and supply chain challenges after a period of improvement in recent years through GIS' ongoing revenue management and cost efficiency initiatives. While Moody's sees some operating margin pressure in the year ahead for the food giant, margins are forecast to remain around the mid-teens area for the fiscal year ended May 2023. The ratings specialist also expects recovery in 2024 and beyond as pricing is implemented and the rate of inflation stabilizes.

The ratings look is important for dividend investors looking for General Mills ( GIS ) to hike the quarterly payout once again. Moody's expects General Mills' ( GIS ) debt-to-EBITDA leverage to remain relatively flat in the low 3X range for the next 12-18 months, which is seen providing good financial flexibility to reinvest and generate strong free cash flow through a range of economic cycles. General Mills ( GIS ) is expected to continue its focus to drive long-term shareholder value with targeted shareholder distributions equal to or greater than 90% of cash flow from operations after backing out capital spending.

The dividend yield on General Mills ( GIS ) for new buyers is 2.54%. See the dividend scorecard on GIS.

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