How Much Did General Mills Return to Shareholders in YTD 2016?



Quarterly dividend increased

In this article, we will discuss the recent dividend increase declared by General Mills (GIS) along with where the company stands with respect to its cost-savings initiatives. General Mills paid year-to-date dividends of $795 million, an increase of 6%.

Before the third quarter earnings release on March 8, the board approved a quarterly dividend of $0.46 per share. This will be paid on May 2, 2016, to stockholders of record as of the close of business on April 11, 2016. This represents an increase of 4.5% compared to the earlier quarterly dividend of $0.44 per share.

This marks the seventh increase by General Mills since 2010. For fiscal 2016, the total dividends per share will be $1.78, including the increased quarterly dividend of $0.46. This annual dividend is an increase of 7% compared to the annual dividend of $1.67 paid in fiscal 2015.

General Mills has a dividend yield of 2.82% as of March 28, 2016. Management has raised the dividend at an average annual rate of 11.5% over the last five years.

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Share repurchases

General Mills (GIS) repurchased 10.6 million shares of common stock at an aggregate price of $602 million in the first nine months of fiscal 2016. Average diluted shares outstanding through the first nine months were 612 million.

The company is on track to deliver more than 90% of its free cash flow to shareholders in fiscal 2016. The free cash flow totaled $1,384 million in the first nine months of fiscal 2016, compared to $1,071 million in the same quarter a year ago.

Expectations from the cost-savings initiatives

General Mills expects to achieve $400 million in cost savings in fiscal 2016. It also continues to make progress to reach its goal of $500 million in savings from additional projects by fiscal 2018. The company’s cost-saving initiative is linked to the combination of Project Century, Project Compass, and Project Catalyst, as well as the company’s policies and practices updates such as zero-based budgeting.

General Mills’ industry peers Pinnacle Foods (PF), McCormick & Company (MKC), and Snyder Lance (LNCE) returned -13.8%, 12.4%, and -10.3%, respectively, year-to-date. The PowerShares S&P 500 High Dividend Low Volatility Portfolio ETF (SPHD) invests 1.5% of its holdings in GIS.


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