You know that old song, right? The one with Neil Diamond and Barbra Streisand crooning about how nobody brings flowers anymore. Yeah, that one. Funny thing, back in my teenage years, I was more into blasting AC/DC and Van Halen — you know, the stuff you crank up so the neighbors might think there’s a live concert next door. But when my dad played this duet, something about it just hit me. Weird, huh?
Those lyrics… they totally capture that feeling of drifting apart. Like, you’re not even speaking anymore when someone walks through the door. Ever felt that way with stocks? No? Well, hear me out.
Take Flowers Foods (NYSE: FLO) for example. Their shareholders might be singing a similar tune. Despite offering what sounds like a juicy 6.3% yield, their stock’s been on a downward slide for, oh, about 2 and a half years. It’s lost half its value. Ouch.
But here’s the twist. Unlike Neil and Barbra’s sad story, Flowers Foods is doing its darnedest to woo back its shareholders. Throwing out a solid dividend yield and bumping it up annually. So, let’s dive into whether this love affair with dividends is built to last.
Flowers Foods, in case you didn’t know (and who does unless you’re obsessing over bread?), makes baked stuff. We’re talking Nature’s Own, Dave’s Killer Bread, Wonder — and even those Tastykake snacks. Okay, I need a snack now.
Yeah, 2022 wasn’t its best year — they kind of stumbled. But they’re bouncing back, mainly by snapping up other businesses. They’re expected to boost free cash flow by 4% come 2025. Something about free cash flow just sounds like you’re living the dream, doesn’t it?
Last year, they handed out $203 million in dividends. That’s a payout ratio of 72%. I’m kinda picky about these things — 75% is my personal cutoff. If a company stays below that, I figure they can ride out any storm without slashing dividends. This year? They’re upping it to $208 million with a slightly better (and lower) payout ratio. Solid.
Let me tell you, Flowers Foods has quite a record. They’ve been upping their dividends every year since 2002. Can you believe they even did it during the pandemic? Just a penny more each time, but still. Who knew bread could be this reliable?
Yet, Wall Street, in its infinite wisdom, doesn’t seem to be buying into their whole “buy more stuff” strategy for growth. But hey, Flowers Foods’ rise in cash flow, smart payout ratio, and stellar track record mean investors don’t need to worry about their dividend drying up. Unlike that couple in the song.
So, yeah. Their dividend is safe.
This is where I’d slap a big, confident “Dividend Safety Rating: A” if I were labeling stuff. Which I guess I am. Oh, and in case you’re curious about other dividend safety tales, drop a ticker in the comments. We’ve got a “Search” feature on our site if you want to play detective with your favorite stocks. Just FYI, Safety Net’s only up for analyzing individual stocks, not the whole mix like ETFs and whatnot.
Anyway, enough rambling. Go enjoy some bread. Or flowers. Or both.
