Most companies in the food business are doing well these days and B&G Foods Inc. (BGS) — a little-known firm — is no exception, explains dividend expert Gordon Pape, editor of The Income Investor.
The company produces a wide range of brands, the best-known of which are Green Giant and Cream of Wheat. Others include Back to Nature, B&G, B&M, Dash, Las Palmas, Le Sueur, Mama Mary’s, Maple Grove Farms, Ortega, Polaner, Spice Islands, New York Style, and Victoria.
Net sales during the first quarter were up 8.9%, to $449.4 million, and the uptrend has accelerated since then. Sales in May came in at $160.1 million, an astounding increase of 50.5% over the same period last year.
The company expects net sales for the second quarter of 2020 to be in the range of $510 million to $525 million. Adjusted net income for the first quarter was $29.2 million ($0.46 per share, fully diluted), compared to $29.1 million, ($0.44 per share), for the first quarter of 2019.
The increase was primarily attributable to the positive impact of the COVID-19 pandemic on the company’s net sales, as well as the acquisition of Clabber Girl in the second quarter of 2019. Adjusted EBITDA as a percentage of net sales was 18% for the first quarter of 2020, compared to 18.4% a year ago.
The stock pays a quarterly dividend of $0.475 per share . I don’t expect any increase in the near future, but the sales growth makes the financial position of this company more attractive.
The 7.9% yield says the market is still attributing considerable risk here but I like the general direction we’re seeing and recommend the stock to more aggressive investors.
