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| Kraft Foods Group (KRFT) New Dividend Stock For The Passive Yield Income Portfolio |
Kraft Foods
is the major diversified food company within in the United States. Roughly 20%
of sales are generated outside the United States.
The shares
are weighted at 1.7% of the total yield income portfolio and they will generate
an annualized dividend income of 76 bucks per year. The total income is now
around $700 per year. My investment costs were $18,000 and the yield on cost is
3.68%.
The
portfolio was funded with $100,000 virtual, 3 months before and has now 13
stock holdings. I tried to put every Friday one stock into the portfolio. The
efforts are not very high. The stock has normally a strong brand and good
dividends or something else that sells. Buy
Big Dividend Stocks is one of the head points.
What I try to
do is to invest money into mid-yielding stocks, stocks with a dividend yield of
around 2-4%. It is hard to find stocks that pay a yield over 3% and have a
high-quality and proven
business model.
Because the
portfolio is 1.45% down since I funded it, the current portfolio yield is
3.72%. That is a bad performance you would say. You are right for the time
being. But the strategy is to buy slowly and over long period. Returns are
realized over a long investment horizon and not over month and hours.
If you want
to get quick rich you should avoid buying stocks, penny stocks high-yields or
something else. You should play with the money in Las Vegas. Or start to work -
Your payments per hour are much higher.
But this is
not the philosophy of a smart investor. Wise investors invest their money into
great companies with growth potential that is fairly priced. If you are an
anxious investor, please put your money in value stocks with growth potential. Dividends
will come from alone if your company is managed by trustful employees. Finally,
the time brings the return.
Until the
end of next year 2013, I like to increase the amount of stock holdings to 52 -
70 in total. This should be realistic. All I need to do is to buy one stock the
week. If I should realize this, the full dividend income should be around $3,500
per year.
So why did
I bought Kraft Foods shares for the dividend yield passive income portfolio?
There are
several reasons for the buy. Kraft Foods manufactures and markets food and
beverage products, including convenient meals, refreshment beverages and
coffee, cheese and other grocery products, in the United States and Canada,
under a stable of iconic brands. The Company's product categories span
breakfast, lunch and dinner meal occasions, both at home and in foodservice
locations. It sells its products to supermarket chains, wholesalers, supercenters,
club stores, mass merchandisers, distributors, convenience stores, drug stores,
gasoline stations, value stores and other retail food outlets in the United
States and Canada.
The first
reason is that the dividend yield is around 4.5%. That's a pretty high figure
for a food company with great value and strong brands. In addition the new
Kraft Foods Group is one of the biggest food players in North America. The
company is nearly dept free and has enough potential to be a consolidation
leader.
Kraft Foods
Group generates roughly 2.6 billion cash from operating activities at 400
million capital expenditures. Calculated on this amounts I expect that the
company will become around 4 billion in debt in order to finance further growth,
repurchase own shares or even to increase dividends.
If we take
a look at competitors like Heinz General Mills or Campbell Soup we could see
that the evaluation is not cheap but also not expensive. The reason why KRFT
shares are cheaper than the competitors is the low amount of dept.
The current
P/E ratio from Kraft Foods is 13.53. Heinz has a P/E ratio of 17.94, General
Mills P/E ratio is at 14.78 and Campbell Soup is traded at 14.65 times of
earnings.
I've no
idea how fast the company can grow in the near future. For the next five years,
earnings per share are expected to grow by 6.3%. That's one of the top values
from peer.
What do you
think about Kraft Foods? So you believe in future of the company and was the
spin-off into Kraft Foods Group and Mondelez a wise decision? Let me know and leave
the comment in the box below.
Here is the full portfolio:
Here is the full portfolio:
Sym
|
Name
|
P/E Ratio
|
Dividend Yield
|
Buy
|
# Shrs
|
Income
|
Value
|
|
TRI
|
N/A
|
4.47
|
28.90
|
50
|
$64.00
|
$1,443.50
|
||
LMT
|
Lockheed Martin C
|
10.48
|
4.54
|
92.72
|
20
|
$83.00
|
$1,809.00
|
|
INTC
|
Intel Corporation
|
8.82
|
4.3
|
21.27
|
50
|
$43.50
|
$1,018.50
|
|
MCD
|
McDonald's Corpor
|
16.49
|
3.28
|
87.33
|
15
|
$43.05
|
$1,305.00
|
|
WU
|
Western Union Com
|
6.62
|
3.18
|
11.95
|
100
|
$42.50
|
$1,332.00
|
|
PM
|
Philip Morris Int
|
16.53
|
3.97
|
85.42
|
20
|
$65.58
|
$1,649.41
|
|
JNJ
|
Johnson & Johnson
|
22.76
|
3.45
|
69.19
|
20
|
$48.00
|
$1,389.00
|
|
MO
|
Altria Group Inc
|
16.2
|
5.47
|
33.48
|
40
|
$68.00
|
$1,240.40
|
|
SYY
|
Sysco Corporation
|
16.71
|
3.44
|
31.65
|
40
|
$43.20
|
$1,250.00
|
|
DRI
|
Darden Restaurant
|
12.7
|
4.19
|
46.66
|
30
|
$55.80
|
$1,333.49
|
|
CA
|
CA Inc.
|
11.06
|
4.59
|
21.86
|
50
|
$50.00
|
$1,085.50
|
|
PG
|
Procter & Gamble
|
18.7
|
3.29
|
68.72
|
25
|
$55.28
|
$1,677.75
|
|
KRFT
|
Kraft Foods Group
|
13.56
|
1.13
|
44.41
|
40
|
$20.00
|
$1,778.00
|
|
$681.91
|
$18,311.55
|
|||||||
Average Yield
|
3.72%
|
|||||||
Yield On Cost
|
3.68%
|