Campbell Dividends: Chunky? or Consommé?

Campbell Looks a Little Thin These Days


With a seeming imperviousness to economic cycles, Campbell's annual operating income has varied little over the past decade. In a world of low interest rates, that bondlike quality is a plus. Campbell funds dividends and buybacks from healthy free cash flow: Fiscal 2012's equates to a "yield" of 5.6% of the company's market capitalization. That is higher than for many "junk" bonds.

And unlike regular bonds, a stock also will at least keep pace with inflation, or at least that's the theory. Adjusted for the consumer-price index, Campbell's operating income has in fact shrunk over the past 10 years at a compound annual rate of 1%.

Without sustained growth beyond the cosmetic effect of share buybacks on earnings per share, Campbell's appeal is tied to low interest rates. That isn't a permanent state of affairs, though, and shareholders may be in for a rude surprise when they get back to normal.

No soup for you!
Comment: Soup Nazi, Andy Warhol's Campbell's Soup Cans. My take on CPB: Uber conservative. We have shares in an IRA and have seen some growth. My favorite Campbell's soup is bean with bacon.

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