ConAgra: Food for Thought

11/19/2014 8:00 am EST


David Fish

Executive Editor, Moneypaper

It seems as if pundits are always searching for complicated explanations whenever the market bounces back from a sharp selloff and achieves new all time highs, explains dividend expert David Fish in Direct Investing.

More often than not, they cite technical factors or a complex mixture of politics and international commerce, combined with interest rates and unemployment trends.

It seems pretty clear that all too many of them seek to justify their expert status by suggesting complexity that goes beyond the understanding of the masses, but what they consistently fail to realize is that simplicity is generally better for explaining why stocks do what they do.

Earnings are the primary driver of equities, but traders and commentators need something to talk about the other 99% of the time. Noisemakers are better saved for greeting a New Year.

Our latest featured dividend reinvestment idea is ConAgra Foods (CAG). Founded in 1919, ConAgra Foods produces shelf-stable, frozen, and refrigerated products, as well as specialty, milled, and basic ingredients.

Its products include such familiar brand names as Healthy Choice, Banquet, Orville Redenbacher, Marie Callender’s, Peter Pan, Slim Jim, Reddi-wip, Swiss Miss, Wesson, Del Monte, and Hunt's.

Consensus estimates call for the company to earn about $2.25 per share in the fiscal year that ends next May and $2.39 in fiscal 2016, compared with $2.17 in fiscal 2014.

Stock repurchases have reduced the number of outstanding shares from 529.3 million in 2003 to 424.8 million today and ConAgra has increased its dividend in each of the past seven years, providing a yield of 2.9%.

Meanwhile, Value Line rates the company's Financial Strength an "A" and it’s Stock Price Stability at 90.

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