“B&G Foods, Inc. (BGS 35.48 NYSE – yield 3.60%) makes branded and generic prepared foods. ... In 2012, pre-tax earnings were up 18.4% on 16% pre-tax margin, a nice improvement over 2011’s 14.1% margin and 12.5% growth. Net EPS rose 15.4%. Operating cash flow has been consistently higher than earnings, and was 40% higher in 2012. Return on equity has doubled over the last three years from 12% to 25%. The company is expected to grow EPS 14% from $1.56 in 2013 to $1.78 in 2014, giving it a current P/E of 22. That’s a bit rich for my taste and for the growth rate, but that’s the price of growth nowadays, and I’m more comfortable paying for it in a company like this with a good track record and lots of room to grow. ... I also like the stock’s low volatility, having a beta 20% less than the market’s. B&G’s dividend yield is 3.7% and has grown at a smile-inducing 11.3% per year for the last five years. At 79%, its payout ratio is high, but it is coming down. Last year, it was nearly 90%. ... For its good long-term growth prospects, the stock goes in the Matterhorn Portfolio. Buy B&G Foods up to $38.”
Jack Adamo, Global Dividend Investor, www.globaldividendinvestor.com, 7/30/13
