1 week ago
18
Rick Munarriz, The Motley Fool
Wed, April 22, 2026 astatine 6:32 AM CDT 4 min read
It's casual to spot the attraction to Conagra Brands (NYSE: CAG) these days. Income capitalist jaws volition driblet astatine the 9.4% yield. It's a sanction you know, and since the packaged goods behemoth falls into the user antiaircraft category, immoderate mightiness deliberation it's a harmless mode to people a monolithic quarterly distribution.
This could beryllium a large mistake. Let's commencement with the payout. A 9.4% dividend whitethorn look bully to person collected implicit the past year, but the banal has plummeted 42% successful that time. Suddenly, it's not the bargain moneymaker you thought it would be. This high-yielding banal deed a 17-year debased this month.
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Conagra has problems. Revenue is declining for the 3rd fiscal twelvemonth successful a row. Its operating nett is sliding substantially for the 2nd consecutive fiscal year. Conagra has taken nine-figure goodwill impairment hits successful 3 of the past 4 years. This is not a bully spot to be. May I suggest you purpose elsewhere for a dividend stock?
Target (NYSE: TGT) is inactive successful the mediate of a turnaround, but the marketplace likes what it sees. Target banal has risen 35%, arsenic a caller CEO is injecting enthusiasm successful the investing community. Conagra has a caller person coming successful June, but that volition beryllium a trickier concern to remedy.
Inflationary pressures are weighing connected some businesses, but Conagra doesn't person the pricing elasticity to walk it on to its customers. Its trailing gross borderline is astatine a 14-year low. Target has seen its gross borderline amended successful 2 of the past 3 fiscal years.
Target is lone yielding 3.5%, but that's comparable to what the top-yielding wealth marketplace funds are paying these days. It's besides bully for the money. It has boosted its dividend for 54 consecutive years, making it a Dividend King. Conagra stopped hiking its dividend successful 2023, and conscionable keeping the existent organisation going volition beryllium a challenge.
Conagra volition hardly beryllium capable to screen this year's $1.40 a stock successful distributions with the $1.70 per stock that analysts spot it earning. Target has a much tenable payout ratio of 58% based connected the midpoint of its bottom-line guidance for this year.
A large Conagra occupation close present is GLP-1s and different value nonaccomplishment cause breakthroughs leaving consumers little hungry. In short, slim Jim isn't going done arsenic galore of Conagra's Slim Jims. Target volition beryllium conscionable fine. It besides sells food, but slimming Target shoppers whitethorn besides person to update their wardrobe to caller sizes successful the caller normal.
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