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Campbell cuts dividend to 25 cents as debt and weak sales pressure stock
The payout reset is expected to free about $170 million a year in cash flow for debt reduction, with plans for up to $500 million in cost savings.
Campbell Soup has cut its dividend to 25 cents per quarter, a move aimed at making the payout more sustainable as cash flow did not cover the prior payment and debt rose, according to MarketBeat Ratings. The lower dividend sets a forward yield of about 4.7% at recent prices, and the company now has more room to absorb weakness while reducing debt and funding turnaround efforts, the outlet said. MarketBeat Ratings also pointed to the stock’s prior decline, noting that Campbell shares fell about 60% in the preceding quarters as investors priced in dividend risk.
The outlet said the dividend cut creates immediate benefits, including roughly $170 million in annual cash flow that can be directed toward debt reduction. It cited turnaround catalysts that include plans for up to $500 million in cost savings to generate future cash flow.
MarketBeat Ratings added that while the stock dropped more than 8% during the week of the cut, it did not make a new low. It also referenced indicators that suggest buyers are accumulating near support and noted that organic sales were down 1% in both volume and mix, with higher pressure coming from consumers shifting to cheaper private-label brands and away from higher-end options.