Two Beaten-Down Food Stocks Pay 6.5% Yields. Which Dividend Is Safer?
Both General Mills and Kraft Heinz offer nearly identical 6.5% yields at beaten-down valuations, but one of them already cut its dividend once and just wrote down billions in brand value for the second year running. Picking the wrong one…
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For a retirement-focused income investor weighing General Mills (NYSE:GIS | GIS Price Prediction) against Kraft Heinz (NYSE:KHC), the real question is which quarterly check is most likely to keep arriving, and growing, through the next recession. Both trade at forward multiples in the low teens (12 for GIS, 11 for KHC), both took massive brand impairments in the last fiscal year, and both yield roughly 6.5%. The similarities end there.
Yield and Payout Coverage
GIS pays a quarterly dividend of $0.61 per share, or $2.44 annualized, for a yield of 6.69%. KHC pays $0.40 per share quarterly, $1.60 annualized, yielding 6.5%. On headline yield, GIS edges ahead. But coverage matters more. GIS guides FY2027 adjusted EPS to $3.00 to $3.20, down from $3.55 in FY2026. KHC guides FY2026 adjusted EPS to $2.03 to $2.09. Against the $2.44 annual payout, GIS covers its dividend with room to spare on adjusted earnings. KHC’s $1.60 payout is comfortably covered too, but the cushion is thinner and shrinking, with constant-currency adjusted operating income guided down 16% to 18%. Winner: GIS.
Free Cash Flow Durability and Balance Sheet
This is where KHC actually punches back. Kraft Heinz generated $3.66 billion in free cash flow in FY2025, guides FY2026 free cash flow conversion at ~110%, and used the cash to pay down $1.9 billion of debt in the quarter plus another $1 billion after quarter-end. GIS produced $1.63 billion in free cash flow in FY2026, down 29.07%, and guides FY2027 free cash flow conversion to only ~95% of adjusted after-tax earnings. On raw cash coverage of the payout, KHC has the bigger cushion and is actively deleveraging. Winner: KHC.
Dividend Track Record and Brand Portfolio
The dividend histories tell opposing stories. GIS just declared its 127th consecutive year of uninterrupted dividends, and the payment history shows a clean progression from $0.49 per share in 2019-2020 up through the current $0.61, with the latest raise taking hold at the July 2025 ex-date. KHC’s record is uglier. The dividend was reset from $0.625 to $0.40 in 2019 and has stayed frozen ever since, 27 consecutive quarters at $0.40, the exact profile of a payout our free guide to dividend traps flags before a second cut lands. Underlying brand momentum also favors GIS: management cited household penetration growth and pound-share gains, while KHC absorbed $7.4 billion in non-cash goodwill and intangible impairments in Q2 alone, on top of $9.3 billion in FY2025, an explicit accounting acknowledgment that brand equity has eroded. Winner: GIS, decisively.
Verdict
GIS wins the head-to-head for a retirement-focused income investor. The yields are close, but a 6.69% yield backed by a 127-year unbroken payment record, still-rising per-share distributions, and adjusted earnings that cover the dividend comfortably is a fundamentally different proposition than a 6.5% yield attached to a company that already cut once, has held flat for seven years, and just wrote down billions in brand value for the second year running. KHC’s stronger free cash flow conversion and aggressive debt paydown are real, and the stock is up 7.74% year to date versus GIS’s -16.26%, but the ten-year total-return picture, KHC -55.22% versus GIS -16.89%, tells you which brand portfolio has actually held up. The specific risk in GIS is a stalled top line and a stressed consumer eating into FY2027 earnings. The specific risk in KHC is another impairment cycle forcing a second dividend reset. For a retiree who needs the check to keep coming, General Mills is the safer bet.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
