O - Kellogg's Good Company/Bad Company Spin-Off Is Tough to Swallow
2023-08-30 10:05:00 ET
Realty Income (NYSE: O) did it, and so did International Business Machines (NYSE: IBM) . So, on the surface, Kellogg (NYSE: K) isn't unique in my portfolio. But the difference with Kellogg is that the iconic food maker's good company/bad company spin-off is likely to lead to a major adjustment in both the business and the dividend policy. I'm thinking about selling the stock so I'm not left with a bad business and a reduced income stream.
Kellogg is a food maker built upon a strong history in the cereal business. Essentially, cereal provided a reliable cash stream that was used to fund the expansion into other categories, like chips (Pringles) and crackers (Cheez-Its). Given the company's name and history, cereal was also considered somewhat sacred. How could a company built on a cereal foundation sell its cereal business?
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Kellogg's Good Company/Bad Company Spin-Off Is Tough to Swallow