Campbell Soup reported disappointing earnings on May 18, 2018. The stock tumbled 12% on the day and has lost approximately 30% over the past year.
The company has struggled to adapt its portfolio to changing consumer tastes that prefer fresher, healthier offerings. Campbell Soup’s CEO is stepping down, and the firm is undergoing a full strategic review of its business.
In these situations, a company’s dividend can come under pressure if management sees a major need to reduce leverage or invest more aggressively to improve long-term growth prospects.
For income investors wondering how this event might affect Campbell Soup’s desire to maintain its current dividend, the company’s CFO Anthony DiSilvestro was supportive of the payout’s safety:
“But with respect to the dividend, two things I can say. We have a well-articulated priority for the uses of cash. It starts with reinvesting in our business and capital expenditures. Second is the dividend. And third, in the current environment, is to reduce leverage by paying down the debt. We have a robust and significant cash flow, which we fully expect we will continue to maintain a competitive dividend level and to have that dividend increase over time with earnings. So I think the management team as well as the board certainly supports the continued payment of a competitive dividend, and we see nothing that we’re looking at that would change that at all.”
To learn more about Campbell Soup’s dividend safety and growth profile, please click here.
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