In a down month for U.S. equities, General Mills, Inc. (NYSE:GIS) bucked the tide in February 2023. It’s something the packaged foods maker has grown quite accustomed to.

In 2022, when the S&P 500 suffered its worst year since 2008, General Mills ran 24%. Part of it was investors seeking comfort in defensive names. Part of it was General Mills’ strong portfolio of comfort foods.

A boring cereal maker to some investors, General Mills is generating powerful returns for shareholders. The best part: it is finding broad-based success with products not named Cheerios, Cocoa Puffs or Lucky Charms. In fiscal Q2, soups, fruit snacks and refrigerated dough each made solid contributions to the company’s 11% organic sales growth.

Last week, General Mills provided a business update that was as delicious as one of its Betty Crocker cupcakes or Haagen-Dazs pints. The stock gapped up in twice its average volume en route to a six-day winning streak. When General Mills strung together a similar streak in November 2022, it went on to a fresh record high.

The cold cereal maker is hot again, and it's about more than passing on inflation to loyal consumers. Management is keenly in tune with its long-term growth drivers — and pressing all the right buttons along the way.  

What Is General Mills’ Growth Strategy?

General Mills impressed attendees at last week’s Consumer Analyst Group of New York (CAGNY) event by raising its full year guidance — again. The company now expects fiscal 2023 organic sales growth of 10% and adjusted earnings per share (EPS) growth of 7% to 8%. It marked the second time in two months that General Mills raised its FY23 outlook — and came at a time when many consumer-facing companies are offering cautious outlooks and laying off workers.

The guidance boost reflects how well management is executing on its ‘Accelerate’ plan for profitable growth. Accelerate is focused on best-allocating resources towards three main goals: 1) market competitiveness, 2) portfolio optimization and 3) shareholder value.

With industry competition fierce and margins thin, progressing with the first goal is most critical. General Mills’ largest business, North American Retail, has maintained or grown market share in most key categories in the last five fiscal years. It has leaned on the traditional consumer product group (CPG) playbook of brand building, innovation and sales but is wisely adapting to the modern environment. Going forward, investments in connected commerce and supply chain digitization stand to gain a competitive edge.

Pet food is General Mills’ hottest business and a big part of the long-term growth strategy. It got into the space in 2018 by acquiring Blue Buffalo, which has turned out to be a home run. With a boost from pandemic pet ownership trends, Blue Buffalo products are now in twice as many U.S. homes than they were five years ago. And with more pet owners seeking healthier pet food and treat alternatives, the brand looks well-positioned for continued growth. A push into new international markets and an expansion in China has Blue Buffalo at the forefront of the Accelerate strategy.

Does General Mills Pay a Dividend?

General Mills currently pays a $0.54 per share cash dividend. It is a quarterly payout, meaning shareholders are in line to receive $2.16 per share annually. The stock’s 2.7% forward dividend yield is significantly higher than the average consumer staples yield. Packaged food large caps like Kraft Heinz, Kellogg and Conagra offer higher yields, upwards of 3% to 4%.

One thing that makes General Mills stand out from other dividend payers is that it has paid a dividend for 124 consecutive years. That’s even more than the world’s longest lifespan — 122 years.

Over the past 20 years, General Mills has produced double-digit total returns for shareholders through dividend payouts and price appreciation. This places the company above its peer group median and highlights how well the investment has performed through the ups and downs of the economic cycle (including two recessions). 

What General Mills lacks in pizzazz, it more than makes up for stability. Its brand portfolio is one of the strongest in the industry and includes a valuable growth kicker in Blue Buffalo. Expect this ‘mill’ to crank out healthy shareholder returns for more years to come.