Portfolio Update
The FiveTwenty portfolio received $235.41 in dividends in the past week. ADM, EMR, JNJ, and SON paid their quarterly dividends.
| Past Week Dividend | $235.41 |
| Current Quarter Dividend (Q3 2023) | $1,638.08 |
| LifeTime Dividend | $14,104.38 |
| Estimated Annual Dividend | $10,321.50 |
The capital allocation for the week of 09/10/2023 to 09/16/2023 will be used to add to our position in Kellogg Co (NYSE: K).
K – Position Update
Since our last check-in on K in week 13 of 2023, the company reported Q1 2023 earnings on , and Q2 2023 earnings on 08/03/2023. Furthermore, the share price decreased 9.2% from $65.47 to $59.42 during the period.
| TTM | Prev. Update | 10-year median | |
| Dividend Streak | 20 years | 19 years | |
| Yield | 3.99% | 3.59% | 3.18% |
| Payout Ratio | 55.12%1 | 55.56%2 | |
| P/E | 13.821 | 15.482 |
Q2 2023 earnings report
Did K’s latest earnings report raise any warning flags?
In Q2 2023, K delivered organic sales growth in all regions. In addition, earlier-than-expected recovery in gross profit margins drove a double-digit growth in operating profit. The overall strong performance in the quarter lead the company to raise its full-year guidance across the board.
Overall, revenue grew 4.6%, adjusted operating profit increased 13.9%, and adjusted EPS where 5.9% higher compared to Q2 2022.
| Revenue (in millions) | Adj. Operating Profit (in millions) | Adj. EPS . | |
| Q2 2022 | $3,864 | $529 | $1.18 |
| Q2 2023 | $4,041 | $602 | $1.25 |
| % Change | 4.6% | 13.9% | 5.9% |
Additional noteworthy developments during the quarter:
- On 07/28/2023, the company declared a dividend of $0.60 per share payable 09/15/2023 to shareholders of records as of 09/01/2023. The dividend represents an increase of 2% over the previous dividend.
- K continues to make progress towards its planned separation or its North America cereal business, which is expected to complete during Q4 2023.
Looking ahead, K expects net sales growth of +7%, up from previous guidance of +6% to +7%, operating profit growth of +9% to +10%, compared to previous guidance of +8% to +10%, and adjusted EPS decline of (1)% to (2)%, up from previous guidance of (1)% to (3)%.
Thesis
Why are we adding to our position in K?
Despite solid financial results in Q1 and Q2 2023, shares of K have continued to decline this year. At current levels both the yield and PE are signaling and attractive entry point into the stock.
Previous Articles
- 2023 Week 13: Kellogg Co. (NYSE: K)
- 2022 Week 50: Kellogg Co. (NYSE: K)
- 2022 Week 11: Kellogg Co. (NYSE: K)
- 2021 Week 40: Kellogg Co. (NYSE: K)
- 2021 Week 21: Kellogg Co. (NYSE: K)
Additional Research
Photo by Nyana Stoica on Unsplash