Generating Income from Ketchup - H.J. Heinz (HNZ) Raises Dividend

H.J. Heinz raised its dividend on May 27 from $1.68 to $1.80 per share. At today's price of $44.58 per share, that's a 3.77% dividend yield.

Heinz has done well over the last couple of years even as many parts of the global economy have teetered. The company's revenue has grown from $9 billion in 2007 to $10.1 billion in fiscal 2009. In the most recent quarter, Heinz beat analysts expectations and earned $.60 per share versus projected earnings of $.59.

The company has consistently raised its dividend payout, going from $.38 per quarter in 2007 to .45 today.

For those that don't know, H. J. Heinz Company and its subsidiaries manufacture and market a line of processed food products throughout the world. The Company’s principal products include ketchup, condiments and sauces, frozen food, soups, beans and pasta meals, infant food and other processed food products. The Company operates in five segments: North American Consumer Products, Europe, Asia/Pacific, U.S. Foodservice and Rest of World. The Company’s products are manufactured and packaged to provide foods for consumers, as well as foodservice and institutional customers. During the fiscal year ended April 30, 2009 (fiscal 2009), the Company acquired Benedicta, a sauce business in France; Golden Circle Limited, a fruit and juice business in Australia; La Bonne Cuisine, a chilled dip business in New Zealand, and Papillon, a South African producer of chilled product.

The company is headquartered in Pittsburgh, PA.

Compared to other related companies, Heinz has one of the highest dividend payouts, second only to Kraft (K), which currently pays 4.09%. It has a slightly lower PE than Kraft (15.82 vs. 16.67). It's return on average equity, a measure of how efficiently it produces value is second amongst its peer groups at 59.41. The top spot goes to Campbell Soup (CPB) at over 71.55.

The one note of caution about Heinz is its debt. Amongst peer companies, Heinz has the highest debt load. Total debt to assets is 53.20 while the next highest is Campbell Soup at 43.33. The lowest is Hormel Foods (HRL) at 9.48.