On February 22, 2016, before its fiscal 4Q15 results, B&G Foods (BGS) announced a 20% increase in its annual dividend. The annual dividend rose 20% to $0.42 from $0.35 per share of common stock. On an annualized basis, the dividend increase is from $1.40–$1.68 per share. It will be ~$97.4 million in aggregate dividend for the year based on the company’s current share count.
The quarterly dividend will be payable on May 2, 2016, to shareholders of record as of March 31, 2016. This rise in dividend marked the 46th consecutive quarterly dividend increase. For fiscal 2015, B&G Foods paid $1.37 per share in dividend. BGS has a dividend yield of 3.8% as of February 26. The company’s management has been raising its dividend consistently for the last five years. The dividend has risen at an average annual rate of 11.4%.
B&G Foods management mentioned that this increase in dividend reflects the company’s continued confidence in its base business and strong cash flows generated by its recent Green Giant acquisition. That dividend growth is an integral part of the company’s total shareholder return.
Outlook for 2016
Management provided its fiscal 2016 guidance in its 4Q15 press release. For fiscal 2016, the company expects net sales to be ~$1.38–$1.42 billion. Adjusted EBITDA (earnings before income, tax, depreciation, and amortization) is expected to be ~$294.0–$304.0 million. Adjusted diluted earnings per share are projected to be $1.98–$2.09. Projected 2016 interest expense is ~$70 million. It includes a cash interest expense of $64 million and interest amortization of $6 million. The expected amortization expense is ~$14 million, and the depreciation expense is ~$22 million. The effective tax rate for 2016 is estimated to be ~37%.
Projected 2016 interest expense is ~$70 million. It includes a cash interest expense of $64 million and interest amortization of $6 million. The expected amortization expense is ~$14 million, and expected depreciation expense is ~$22 million. The effective tax rate for 2016 is estimated to be ~37%.
B&G Foods’ competitors in the industry include Hormel Foods (HRL), Pinnacle Foods (PF), and Cal-Maine Foods (CALM). They reported year-to-date returns of 8.6%, 1.9%, and 13.1%, respectively, as of February 26. The PowerShares Dynamic Large Cap Growth ETF (PWB) and the PowerShares Dynamic Food & Beverage ETF (PBJ) invest a total of 1.5% in HRL and 2.5% in CALM.
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