The Campbell's Company: Elevated Dividend Yield Should Provide Support
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Melissa Tucker814 FollowersFollow5ShareSavePlay(7min)CommentsSummaryThe Campbell's Company offers a compelling 5%+ dividend yield, providing downside support amid margin compression and sales headwinds.CPB's dividend is well-covered by earnings, with no reduction expected; a rerating is likely once market confidence in the dividend solidifies.Despite elevated debt and margin pressure, CPB's forward EV/EBITDA of 9.4x appears justified, with fair value estimated at $35 per share. VelhoJunior/iStock Editorial via Getty Images Investment Thesis The Campbell's Company (CPB) yield is above 5%. Despite the company facing some headwinds, I expect that the elevated yield will attract investors, which should provide a floor to the stock. Earnings cover the dividend, andThis article was written byMelissa Tucker814 FollowersFollowWith a professional background spanning multiple industries, from logistics, construction to retail, I bring a diverse perspective to investing. My international education and career experiences have provided me with a global outlook and the ability to analyze market dynamics from different cultural and economic perspectives. I have been actively investing for over a decade, honing a strategy that focuses on cyclical industries while maintaining a diversified portfolio that includes bonds, commodities, and forex. My interest in cyclical sectors stems from their potential for significant returns during periods of economic recovery and growth. However, I also recognize the importance of balancing risk, which is why I incorporate fixed-income investments (long or short).Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.Quick InsightsHow secure is Campbell's (CPB) current dividend given earnings and cash flow?CPB's earnings and cash flow comfortably cover the $1.56 annual dividend, and management does not anticipate a cut; this underpins the stock's yield-driven support.What is the forward valuation and fair value target for CPB amid current headwinds?Assuming $1.7 billion EBITDA, CPB trades at a forward EV/EBITDA of 9.4x, below historical averages; fair value is estimated at $35 per share, with upside if margins recover.What are the key risks to CPB's investment case going forward?Persistent sales declines, commodity and tariff-driven margin pressure, and elevated debt could threaten dividend sustainability and limit rerating potential if not addressed.Recommended For You