Conagra Brands, Inc.CAG
▲ PositiveCapitalrelevance
Dividend cut frees cash for debt reduction and growth, welcomed by investors.
Impact on stocks 1
Consumer Staples
Conagra Brands, Inc.Conagra Brands shares have risen about 4% since the company announced on July 15 that it was cutting its annual dividend from $1.40 to $0.70 per share. The move frees up roughly $335 million a year that can be used to pay down debt and fund growth, with the company targeting net leverage of about four times earnings and facing around $360 million in annual interest expense. New CEO John Brase, who took over in June, framed the reset as a way to invest more in brands like Slim Jim, Birds Eye, Healthy Choice, and Marie Callender's while adopting a 'show-me' posture on product performance. The company still faces headwinds, including expected low-single-digit organic revenue declines, a recent $2 billion brand writedown, and high leverage, but investors welcomed the clarity of the dividend cut after the stock had been yielding around 10%.
Conagra Brands, Inc.Dividend cut frees cash for debt reduction and growth, welcomed by investors.